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[Senate Hearing 109-216]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-216
 
BATTLING THE BACKLOG: CHALLENGES FACING THE VA CLAIMS ADJUDICATION AND 
                             APPEAL PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 2005

                               __________

       Printed for the use of the Committee on Veterans' Affairs

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                               _____

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                     COMMITTEE ON VETERANS' AFFAIRS

                      LARRY CRAIG, Idaho, Chairman
ARLEN SPECTER, Pennsylvania          DANIEL K. AKAKA, Ranking Member, 
KAY BAILEY HUTCHISON, Texas              Hawaii
LINDSEY O. GRAHAM, South Carolina    JOHN D. ROCKEFELLER IV, West 
RICHARD BURR, North Carolina             Virginia
JOHN ENSIGN, Nevada                  JAMES M. JEFFORDS, (I) Vermont
JOHN THUNE, South Dakota             PATTY MURRAY, Washington
JOHNNY ISAKSON, Georgia              BARACK OBAMA, Illinois
                                     KEN SALAZAR, Colorado
                  Lupe Wissel, Majority Staff Director
               D. Noelani Kalipi, Minority Staff Director

                            C O N T E N T S

                              ----------                              

                              MAY 26, 2005
                                SENATORS

                                                                   Page
Craig, Hon. Larry, Chairman, U.S. Senator from Idaho.............     1
Obama, Hon. Barack, U.S. Senator from Illinois...................     2
Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     4
Rockefeller, Hon. John D. IV, U.S. Senator from West Virginia....     5
Salazar, Hon. Ken, U.S. Senator from Colorado....................     5
Murray, Hon. Patty, Ranking Member, U.S. Senator from Washington.     6

                               WITNESSES

Cooper, Hon. Daniel L., Under Secretary for Benefits, Department 
  of Veterans Affairs; accompanied by Ronald garvin, Acting 
  Cahirman of the Board of Veterans' Appeals; and Robert H. 
  Epley, Associate Deputy Under Secretary for Policy and Program 
  Management, Veterans Benefits Administrarion...................     7
    Prepared statement...........................................     8
Kramer, Hon. Kenneth B., Former Chief Judge, U.S. Court of 
  Appeals for Veterans Claims....................................    28
    Prepared statement...........................................    30
Bascetta, Cynthia, Director, Education, Workforce, and Income 
  Security, Government Accountability Office.....................    33
    Prepared statement...........................................    34
Chisholm, Robert, Past President, National Organization of 
  Veterans' Advocates............................................    38
    Prepared statement...........................................    40
Surratt, Rick, deputy National Legislative Director, Disabled 
  American Veterans..............................................    42
    Prepared statement...........................................    44

                                APPENDIX

Response to written questions submitted by Hon. Larry E. Craig 
  to:
    Daniel L. Cooper.............................................    65
    Robert V. Chisolm............................................    73
    Rick Surratt.................................................    74
    Kenneth B. Kramer............................................    88
Response to written questions submitted by Hon. John D. 
  Rockefeller IV to:
    Daniel L. Cooper.............................................    87
    Kenneth Kramer...............................................    89
Kinderman, Quentin, Deputy Director, National Legislative 
  Service, Veterans of Foreign Wars of the United States, 
  prepared statement.............................................    89

                   BATTLING THE BACKLOG: CHALLENGES 
                   FACING THE VA CLAIMS ADJUDICATION 
                           AND APPEAL PROCESS

                              ----------                              

                         THURSDAY, MAY 26, 2005

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:02 p.m., in 
room SR-418, Russell Senate Office Building, Hon. Larry E. 
Craig (Chairman of the Committee) presiding.
    Present: Senators Craig, Burr, Thune, Akaka, Rockefeller, 
Murray, Obama, and Salazar.

 OPENING STATEMENT OF HON. LARRY CRAIG, U.S. SENATOR FROM IDAHO

    Chairman Craig. Good afternoon, everyone, and welcome to 
the Senate Committee on Veterans' Affairs. We have entitled 
this hearing, ``Battling the Backlog: Challenges Facing the VA 
Claims Adjudication and Appeal Process.''
    This afternoon, we will discuss the state of the Department 
of Veterans Affairs' claims adjudication and appeals system. It 
is through this system that separated service members must 
proceed in order to receive VA disability compensation for 
injuries sustained during military service.
    Especially during the time of war, when we have thousands 
of wounded soldiers returning from the battlefield, it is 
essential that we ensure there is a system in place that will 
provide prompt and accurate decisions to those who have served, 
sacrificed, and suffered for our Nation.
    Over the years, there has been significant concern about 
the backlog of claims in the VA system, the length of time 
claims remain pending; and the quality of the decisions being 
rendered. And in recent months, there have been serious 
questions raised by the press, members of Congress, my 
colleague who is a member of the Committee and has joined me, 
VA's Office of Inspector General, regarding the ability of this 
vast system to provide consistent decisions for veterans across 
the country.
    Earlier this year, Secretary Nicholson testified before 
this Committee that, as a presidential initiative, improving 
the timeliness and accuracy of claims proceedings remains VA's 
top priority for VA's benefits program. And our Committee is 
also committed to ensuring that we continually strive to 
improve this system.
    To that end, today we will discuss how well the current 
system is serving our Nation's veterans, what challenges the 
system is facing, and what steps can be and should be taken to 
ensure that, now and in the future, our veterans will not 
endure delays in receiving a fair resolution of their claims.
    Joining us for this discussion we have on the first panel 
the Honorable Daniel Cooper, the Under Secretary for Benefits 
in the Department of Veterans' Affairs. Welcome, sir. He is 
accompanied by Ronald Garvin, the Acting Chairman for the Board 
of Veterans' Appeals. Welcome. And Robert Epley, Associate 
Deputy Under Secretary for Policy and Program Management for 
the Veterans Benefits Administration. Bob, welcome.
    On our second panel, we will be pleased to have a very 
distinguished public servant, the Honorable Ken Kramer, who 
recently retired as the Chief Judge of the United States Court 
of Appeals for Veterans' Claims; and in a former life in which 
I first knew him, as a Congressman from Colorado.
    We also are pleased to be joined on the second panel by 
Cynthia Bascetta, Director of Education, Workforce, and Income 
Security for the U.S. Government Accountability Office; Rick 
Surratt, the Deputy National Legislative Director for the 
Disabled American Veterans; and Robert Chisholm, former 
president, National Organization of Veterans Advocates.
    Ladies and gentlemen, we welcome you all. Our Ranking 
Member has just arrived. While he is getting his house in 
order, I know that the Senator from Illinois has an appointment 
awaiting him, so I am going to turn to Senator Obama for his 
comments, and then we will come back to Senator Akaka, the 
Ranking Member of the Committee.
    Senator.

            OPENING STATEMENT OF HON. BARACK OBAMA, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Obama. Thank you so much, Mr. Chairman. Thank you 
to my wonderful Ranking Member, for allowing me the prerogative 
of going quickly. I apologize in advance; I am going to have to 
leave in a few minutes, but will try to get back before the end 
of the hearing.
    I want to thank Admiral Cooper and the other persons on the 
panel for your appearance and participation in this important 
hearing.
    You know, when we call our armed forces to go into battle 
to defend this Nation, they don't tell us, ``Not now; it is not 
a convenient time,'' or, ``Call us back in a couple of months; 
we will be ready then.'' Instead, what they do is, they respond 
immediately, and go bravely into battle to fight for our 
democracy.
    Their prompt response to their Nation's call to arms stands 
in stark contrast to how our Government seems to be dealing 
with these soldiers when they return home. When veterans ask 
for their earned benefits, and decide to appeal a decision, 
they are subject to, on average, a 3-year wait. In fact, some 
veterans are asked to wait more than a decade to have their 
claims fully adjudicated.
    This doesn't sit right by me. I don't think it sits right 
by the American people. I know that Admiral Cooper has been 
working diligently to try to improve the situation. But part of 
my specific and particular concern arises out of the fact that 
there also appear to be large discrepancies between benefits 
that are paid in various States.
    Admiral Cooper, along with Secretary Nicholson, attended a 
town hall meeting in Illinois this past week to discuss what 
could be done to improve the variability in rating certain 
illnesses; particularly those like post-traumatic stress 
disorder, that may not have objective visible physical 
attributes.
    And the reason I think I am very concerned about how we are 
moving forward is, number one, that in Illinois, Secretary 
Nicholson discussed the fact that we may need to look at claims 
from the past in which Illinois veterans seem to have been 
shortchanged. And I am going to be working with Admiral Cooper, 
Secretary Nicholson, and others, to try to figure out how we 
set that system up.
    More broadly, it appears that the claims delays are worse 
in Illinois and in the Chicago regional office, than they are 
in other parts of the country. And finally, even where the 
national average is concerned, it appears to be far too high.
    I think that we have a lot of work to do, both specifically 
to Illinois and across the Nation. We need to shorten the time 
that it takes to file and appeal a claim. I hope that we can 
create some standards that create consistency in the 
disposition of these claims at the end of them.
    I have read the written testimony that is being presented. 
I will be very interested in figuring out how we on the 
Committee can be helpful to the VA in making significant 
progress in this area.
    The last point that I would make, Mr. Chairman, is that one 
of the things that happened when Secretary Nicholson was at our 
town hall meeting in Illinois was an acknowledgement that some 
of the variability, and certainly some of the delay, had to do 
with what appears, at least from the IG's report, some under-
staffing in some of these offices. When we had discussions 
during the budget debate about getting more money into the VA, 
there was a presentation made by the Secretary that in fact we 
had sufficient money to deal with these claims. Both things 
can't be true.
    If, in fact, part of the problem has to do with the fact 
that the VA just doesn't have enough personnel to deal with 
this backlog and get the time for appeals down to the stated 
goals that have been established, then we have to have that 
reflected in our budget and that has to be part of the 
commitment that we make to our veterans.
    I don't want to be criticizing a department that is 
understaffed for not operating as quickly as it should. On the 
other hand, I expect that department to be honest when it says 
that it is short-staffed, so that we can get them the 
resources. And so, to the extent that Admiral Cooper will be 
touching on staffing issues as part of this whole conversation, 
I will consider that testimony with great interest. Thank you 
very much, Mr. Chairman.
    Chairman Craig. Thank you, Senator.
    And now let me turn to our Ranking Member, Senator Akaka.
    Dan.

          OPENING STATEMENT OF HON. DANIEL K. AKAKA, 
            RANKING MEMBER, U.S. SENATOR FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman. I am so 
happy that we are having this hearing today and having the 
distinguished witnesses we have. And I am very pleased to 
welcome back to this Committee Admiral Cooper.
    Mr. Epley, I understand that this will be your last time 
with us. And thank you so much for your service to our Nation's 
veterans.
    Former Chief Judge Kramer, I am very pleased that you have 
agreed to join us today to give us your special insight into 
the claims process and how it is working. And we hope to have 
you make suggestions for improvement.
    I, additionally, want to thank the rest of the panel 
members in advance for testifying before us today. As we all 
know, the claims process is very important for our Nation's 
veterans. All veterans deserve no less--no less than quality 
workmanship done in a timely manner.
    Those of you on the second panel have a unique perspective 
on claims processing, and I am happy that you are here to share 
it with us today. We plan to use this hearing as an 
opportunity; an opportunity to hear all angles of the issue.
    This hearing will be broadly focused; hopefully, touching 
on major areas of concern in the VA claims process. The 
information gathered at this hearing will be used as a basis 
for more narrowly-tailored hearings in the future.
    Along with Chairman Craig, I look forward to building on 
what we learn today and in subsequent hearings. To date, in 
fiscal year 2005, 43 percent of the claims reaching the Board 
of Veterans' Appeals are remanded. These remands worry me 
because of the additional time it adds to the process. Today, I 
hope to hear about the causes of these remands, and possible 
ways to eliminate the errors at the regional office level that 
are causing the high remand rate.
    I also note to Admiral Cooper that your testimony states 
that delays in remand processing grew as a result of the 
resource demands of the total growing workload. Admiral Cooper, 
I would like to work with you to appropriately address this 
situation.
    I want to thank the VA for the proactive steps it has made 
towards decreasing the delay in standardizing business 
processes through the creation of the appeals management center 
and the claims processing improvement model. However, we can 
all see that there is much more work to be done.
    I want to make a few remarks about the recent VA Inspector 
General's report. The report states that it is statistically 
impossible for each State to have virtually identical average 
payments, and that there are numerous factors that affect 
payments by State. The report says the VA must determine, and I 
quote, ``whether the magnitude of the variance from the highest 
average State payment to the lowest average State payment is 
within acceptable limits.'' I, for one, believe that it is not.
    The Inspector General states that some reasons for the 
payment differential are timeliness pressures, greater 
experience, and training. These all seem to be personnel and 
staffing issues that could be fixed if the VA and Congress 
worked together to allocate the necessary resources.
    Another factor stated in the report is subjectivity in PTSD 
claims ratings. While some disabilities such as PTSD are more 
prone to subjective rating decisions, such subjectivity adds to 
the inconsistent decisions. There must be common standards for 
rating PTSD to ensure fair treatment of our veterans, whether 
they live in New Mexico or Illinois. But these common standards 
should not overlook the varying degrees of disability caused by 
PTSD.
    I am happy to know, Admiral Cooper, that you agreed with 
the review findings and recommendations of the report. I hope 
that you will periodically inform the Committee on the VA's 
progress in correcting the problems within claims processing.
    Thank you. I look forward, Mr. Chairman, to hearing the 
testimony of our witnesses.
    Chairman Craig. Senator Akaka, thank you very much.
    Senator Rockefeller, any opening comments?

OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, U.S. SENATOR 
                       FROM WEST VIRGINIA

    Senator Rockefeller. Mr. Chairman, thank you for having 
this hearing.
    My West Virginia staff, which is a third of my total staff 
members, spends almost half their time on claims cases having 
to do with veterans. I will just say, I look forward to the 
testimony. I understand that there may be some interesting 
ideas coming out of the testimony. Thank you.
    Chairman Craig. Thank you very much.
    Senator Salazar, any opening comments?

   OPENING STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR FROM 
                            COLORADO

    Senator Salazar. Thank you very much, Chairman Craig, and 
Ranking Member Akaka, and members of the Committee. And to all 
the witnesses, we look forward to your testimony.
    I look forward, as well, to hearing from another Coloradan, 
former Congressman Ken Kramer, about his thoughts on how we 
might be able to improve this system.
    This is only my fifth month here in Washington, D.C., so I 
am the number-100 Senator. But this Committee to me is one of 
the most important things that I work on here. And it is 
because in Colorado, as I travel around my State, I hear so 
much from the veterans in Colorado about delays in processing 
their claims. And like Senator Rockefeller spoke earlier, it is 
one of the areas that consumes a significant amount of the time 
in my office.
    We can tell the story in the lives of veterans who approach 
us and tell us about the hardships that are being caused by 
delays in the processing of their claims, or we can look to the 
statistics. And when we look at the statistics, I understand we 
have 340,000 veterans that are waiting for their claims to be 
adjudicated at this time. And that is up 86,000 from October of 
2003.
    The average wait for a rating on debated claims jumped from 
111 days to 119 days in that same period. And thousands of 
veterans have waited around as sometimes, from their point of 
view, they get passed around kind of like an administrative 
football.
    These veterans are men and women who didn't hesitate when 
our Nation called them to serve. They did not delay when they 
were ordered to risk their lives for us. Yet we are asking them 
sometimes to wait years for the benefits that they are entitled 
to. And so the purpose of this hearing, hopefully, will be to 
help us work together to figure out how we can do a better job.
    An important part of the solution is making sure that the 
VA has the men and women power and the resources to do their 
jobs. The Veterans' Administration has not, in my view, 
properly explained how it will deal with nearly 800,000 claims, 
when I understand we only have fewer than 9,000 workers to 
process those claims.
    These are claims that are longer and more complex than they 
were in years past. And I would like Admiral Cooper, in my 
admiration and respect for you, to explain how you intend to 
cut into that backlog and to improve the accuracy rates, with 
the limited resources that you have for this task.
    We also need to continue to improve the fairness and 
efficiency of the system. It is a system that gives to veterans 
of one State an average of $12,000, and gives veterans in 
another State less than $7,000. We need to understand why that 
occurs. And my home State of Colorado is below the national 
average in veterans' compensation.
    We need to improve training and communication at the 
regional offices, to make sure that the system is fair and 
consistent. We need to continue adjusting the system, from 
gradual small administrative changes, such as improving quality 
control measures, to more significant legislative reforms, such 
as simplifying the appeals process in a way that preserves 
veterans' rights.
    Backlogs and quality control are issues that have bedeviled 
the VA for decades. These are not new issues. And it is not one 
that I believe we can solve overnight, but I am hoping that 
today's hearing and your leadership at the Veterans' 
Administration will help us move forward in making progress in 
the resolution of some of these issues.
    And finally, let me just note that both Senator Craig, I am 
sure, and I are delighted with the fact that our good friend 
and colleague from Ohio, former Attorney General Al Lance, is 
now sitting comfortably in the Court of Veterans' Claims. And I 
know that he will do a great job on behalf of veterans in that 
position. Thank you, Mr. Chairman.
    Chairman Craig. Senator, thank you very much.
    We have been joined by Senator Murray. Patty, do you have 
any opening comments you would like to make?

   OPENING STATEMENT OF HON. PATTY MURRAY, U.S. SENATOR FROM 
                           WASHINGTON

    Senator Murray. I will submit my comments for the record. 
Let me just join my colleagues in welcoming you all here. You 
have a tremendous task in front of you.
    We are all heading home for the Memorial Day recess. I am 
sure we will all be talking with troops and observing the 
holiday over the weekend. We are going to come back and face 
some serious issues with some of the claims that are pending, 
and continued concern from our veterans who are not getting the 
services they need.
    And I think every senator in this entire body has someone 
working for them full-time helping veterans from their home get 
through the process. And I think it really behooves all of us 
to determine how we can get through that and deal with the red 
tape and the delay in the best way possible for those who have 
served us. Thank you, Mr. Chairman.
    Chairman Craig. Patty, thank you very much.
    Now, then let's turn to you, Daniel Cooper, Under Secretary 
for Benefits, Department of Veterans' Affairs. Dan, please 
proceed.

    STATEMENT OF HON. DANIEL L. COOPER, UNDER SECRETARY FOR 
BENEFITS, DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY RONALD 
GARVIN, ACTING CHAIRMAN OF THE BOARD OF VETERANS' APPEALS; AND 
 ROBERT H. EPLEY, ASSOCIATE DEPUTY UNDER SECRETARY FOR POLICY 
    AND PROGRAM MANAGEMENT, VETERANS BENEFITS ADMINISTRATION

    Adm. Copper. Thank you, sir. Mr. Chairman, members of the 
Committee, thank you for the opportunity to testify today 
concerning the VA's disability claims process. I am 
accompanied, by Ron Garvin, the Acting Chairman of the Board of 
Veterans' Appeals, and Mr. Bob Epley, my Associate Deputy for 
Programs.
    I understand today that your interest is primarily in the 
disability compensation process. This process is built on a 
body of law that has evolved over many years. It is 
complicated, and it sometimes takes longer than any of us wish 
to reach decisions. But at the foundation, the disability 
claims process is designed to offer veterans the broadest 
opportunities and assistance to apply and reapply for benefits, 
so they receive their fullest entitlement.
    That single concept--the benefit of the doubt for the 
veteran--frames all of the other elements of our process. In my 
written statement, I've tried to outline how the disability 
claims process works; provide some statistics about our 
performance; and provide some description of the major factors 
that complicate it.
    Over the last several years, several management actions 
have been taken to improve the process. We have worked to 
bolster our staffing and strengthen the training we provide to 
the staff. We have standardized the work process. We have 
installed significant performance and accountability measures, 
and we monitor those measures diligently.
    These steps have helped. We have stabilized our work, but 
challenges remain and new challenges continue to arise. One of 
our biggest challenges is obviously the growth of incoming 
claims. Almost 2.6 million veterans are receiving disability 
compensation today, more than at any time in U.S. history.
    The number on the rolls is growing at the rate of 5,000 to 
7,000 per month. Coincident with this growth, the number of 
claims we receive each month is increasing, and the number of 
issues on each claim for each veteran is also rising steadily.
    Legislative changes also affect our process. Most notably, 
the passage of VCAA, the Veterans Claims Assistance Act, had a 
dramatic effect on our work. This legislation clarified and 
enhanced the VA's duty to assist claimants. But it also 
resulted in a larger inventory of pending work, and it 
lengthened the process.
    In addition, court decisions can affect our claims process. 
An example of this was the PVA v. VA case, decided in September 
of 2003. This decision directed that the VA hold open many of 
our pending claims until one year after the date of claim. It 
slowed down the system dramatically for about 3 months, until 
Congress passed amending legislation.
    Our appeals process is another key component of this VA 
disability claims process. Our Board of Veterans' Appeals was 
established in 1933 to review evidence, to hold hearings, and 
to render quality decisions on appeals of claims for veterans' 
benefits. Its function remains essentially the same today.
    A claimant initiates an appeal by filing a notice of 
disagreement with the original regional office. The regional 
office offers the opportunity for the claimant to discuss that 
appeal with a decision review officer in that office. Then, if 
it does not resolve the appeal, the claimant can continue his 
action by filing a substantive appeal to the Board of Veterans' 
Appeals.
    Claimants also have a right to a hearing on their appeal, 
and this can be arranged at the regional office, by 
videoconference, or in Washington, DC, at the Board of 
Veterans' Appeals. Most appellants choose to be represented 
before the Board by veterans' service organizations, and many 
of these organizations have appeals units co-located at the 
Board here in Washington.
    The Board has worked hard to expedite the appeal process, 
but the process continues to be a lengthy one. Our management 
improvement efforts include emphasis on resolving appeals at 
the local level; seeking productivity improvements at the 
Board, and centralizing the handling of remands.
    In summary, our disability claims process has evolved over 
many years. Its fundamental principle is to make the system 
work for the veterans' benefit. The process is complicated, and 
often lengthy; but we continue to look at ways to improve it.
    I welcome your interest in processing systems. I look 
forward to collaborating with you on ways to improve the system 
so that the veterans continue to see improvements in our 
service delivery and each veteran can be fully and fairly 
served in a consistent and timely manner.
    I will now be glad to answer any of your questions.
    [The prepared statement of Adm. Cooper follows:]
Prepared Statement Hon. Daniel L. Cooper, Under Secretary for Benefits, 
                     Department of Veterans Affairs
    Good morning Mr. Chairman and Members of the Committee.
    I am pleased to appear before you today to discuss the extremely 
important work of the Veterans Benefits Administration. As you are 
aware, we administer myriad veterans' programs in VBA. Disability 
compensation is the one program that probably has the most visibility 
in the total veteran community and will be the primary focus of my 
testimony today. I will also briefly discuss several other important 
programs that directly and deeply affect individual veterans and their 
families.
    In June 1944 President Roosevelt signed the original GI Bill. This 
landmark legislation gave birth to our VA Education and Home Loan 
Guaranty Programs. The GI Bill is proclaimed as one of the most 
important social actions of that century. It underpinned major economic 
change for the 16 million veterans returning from WWII in the European 
and Pacific theaters of action, most of whom had never been employed as 
civilians. Each of those veterans was eligible for educational benefits 
and loans for businesses, homes, or farm purchases. Today, our 
Education and Loan Guaranty Programs remain vitally important to both 
veterans and active duty servicemembers.
    Our Vocational Rehabilitation and Employment Program is directed 
specifically at veterans who have an employment handicap as a result of 
their service-related disabilities. We assist these disabled veterans 
in preparing for and obtaining suitable employment, which often means 
establishing rehabilitation programs to help them get a better 
education, obtain basic skills and training, or start a business. For 
the most seriously injured for whom employment is not immediately 
feasible, we provide services to help them gain more independence in 
daily living.
    Our Insurance Program is administered by the Philadelphia Regional 
Office and Insurance Center. We currently have four active insurance 
plans, the largest of which is the Servicemembers Group Life Insurance 
(SGLI) Program. The SGLI Program makes life insurance available to 
every servicemember entering military service. The Philadelphia 
Insurance Center and the Office of Servicemembers Group Life Insurance 
have done an extraordinary job in serving widows and other family 
survivors during Operations Enduring and Iraqi Freedom. Once the 
Insurance Program receives the necessary paperwork from the Department 
of Defense, payments to the surviving beneficiaries are made in less 
than two days.
    Finally, our Disability Pension Program is available for wartime 
veterans who have low income and are permanently and totally disabled.
    Today I am here to discuss the largest of our programs in VBA, the 
Disability Compensation Program. Disability compensation is a monetary 
benefit paid to veterans who are disabled by injury or disease incurred 
or aggravated during active military service. The amount of 
compensation varies with degree of disability and, when appropriate, 
with the number of dependents. Compensation is paid monthly and is not 
subject to either Federal or State income tax. The specific amounts 
paid for each 10 percent step in disability are decided by Congress. 
Today a veteran with 10-percent disability rating receives $108 per 
month. Fifty-percent disabled veterans receive $663; the 90-percent 
rate is $1,380; and the 100 percent rate is $2,299. Note the much 
larger jump from 90 percent to 100 percent versus any other 10-percent 
increment. Those veterans rated 30 percent and higher receive an 
additional allowance for a spouse and each dependent child.
    The recently released report by the Department's Inspector General 
(IG), entitled, ``Review of State Variances in VA Disability 
Compensation Payments,'' stated:

          ``The VA disability compensation program is based on a 1945 
        model that does not reflect modern concepts of disability. Over 
        the past 5 decades, various commissions and studies have 
        repeatedly reported concerns about whether the rating schedule 
        and its governing concept of average impairment adequately 
        reflects medical and technological advancements or changes in 
        workplace opportunities and earning capacity for disabled 
        veterans. Although some updates have occurred, proponents for 
        improving the accuracy and consistency of ratings advocate that 
        a major restructuring of the rating schedule is long overdue.''

    The VA Disability Compensation Program has evolved from a long 
series of legislative actions, spanning most of a century. Each piece 
of legislation was intended to address a specific need, or the needs of 
a special sub-population of veterans. The one constant has been 
Congress' desire to recognize the sacrifice of those who served in 
uniform.
    The incremental legislative process has also had the effect of 
building an increasingly complicated system. Our Disability 
Compensation Program recognizes over 110 diseases that are considered 
to be presumptively related to special military service conditions. 
These special conditions range from prisoner of war experiences, to 
exposure to ionizing radiation, to service in Vietnam (with related 
exposure to Agent Orange).
    In addition to these complicating factors, and possibly because of 
them, the Disability Compensation Program is growing rapidly. Almost 
2.6 million veterans are receiving disability compensation today, more 
than at any time in U.S. history. The number on the rolls is growing at 
a rate of 5,000 to 7,000 per month. Entitlement to disability 
compensation drives eligibility to other programs, including VA medical 
care, vocational rehabilitation, dependents educational assistance, and 
some home loan and insurance benefits. In addition, recent laws provide 
for concurrent receipt of VA disability compensation and military 
retirement benefits. So there are clear incentives for the VA 
Disability Compensation Program to continue to grow.
    All of these laws rightfully serve to benefit our veterans and are 
extremely important to them. A classic example is the group of laws and 
rulings related to Agent Orange exposure. Any veteran stationed in 
Vietnam between January 9, 1962 and May 7, 1975 is presumed to have 
been exposed to Agent Orange, and any of several diseases they might 
have contracted is presumed to be a result of that exposure. The 
presumption of service connection for type II diabetes, in particular, 
resulted in over 100,000 individual claims.
    In addition, a recent law dramatically changed the business of VA 
disability claims adjudication. This legislation was the Veterans 
Claims Assistance Act of 2000 (VCAA). One of its central provisions 
clarified and enhanced VA's ``duty to assist'' veterans with their 
benefit claims. In my opinion, this was a proper and well-conceived law 
that addressed a deficient process under which VA was previously 
adjudicating claims. That law clearly defined VA's responsibilities for 
assisting claimants. It made our adjudicators absolutely responsible 
for helping each individual veteran know what to do, what is needed to 
substantiate his/her claim, and how to respond. It also requires that 
we tell the veteran what we will do to assist him or her.
    It was as a result of the VCAA, and the immediate and very rapid 
accumulation of claims, that Secretary Principi convened the Claims 
Processing Task Force in May 2001. His charge was to ``. . . recommend 
specific actions that the Secretary (of Veterans' Affairs) could 
initiate, within his own authority, without legislative or judicial 
relief, to attack and reduce the current veterans' claims backlog and 
make claims processing more efficient.''
    I was asked to chair that Task Force, although I had had no prior 
experience with VA or with claims processing. However, the Secretary 
appointed to the Task Force a group of individuals who were extremely 
knowledgeable and very motivated. In October 2001, we reported out.
    There had been many such reports over the years, each with a larger 
scope; but ours was focused on what could be done--soon and under the 
purview of the Secretary--without asking Congress to revisit laws or 
opinions.
    The thrust of our recommendations was to improve the efficiency and 
effectiveness of VBA claims processing. Accountability and integrity 
were to be absolute. But the engine was uniformity of organization, 
application, and process. The Task Force was convinced that each of the 
57 regional offices operated in ways unique only to that individual 
office. The Task Force essentially dictated the internal organization 
of all offices, the IT applications to be used by all, and the standard 
business processes to be followed in adjudicating veterans' claims. 
This revised, consistent operational structure is now known as the 
Claims Processing Improvement (CPI) Model. Additionally, we 
specifically increased the oversight from headquarters and in the 
field, and we established measurable goals for which all offices are 
accountable.
    The Task Force also initiated one of the most important and quick-
response recommendations, the establishment of a ``Tiger Team'' in 
Cleveland, Ohio, whose only task was to address claims which were over 
1-year-old, from veterans over 70 years of age. This specialized team 
has also assisted with our most difficult cases, and continues to 
fulfill a valuable role.
    A primary goal we established, as we made major changes in VBA, was 
to increase productivity. We did that in somewhat dramatic fashion. In 
the year 2001, we had completed claims at the rate of 41,000 per month 
across the country. Last year we produced 63,000 per month. There were 
many who said we sacrificed quality. That is incorrect; quality 
improved about 6 percentage points. It is now 86 (plus) percent.
    In February 2002, the number of pending claims in our inventory 
(frequently referred to as the ``backlog'') reached 432,000. Veterans 
were waiting 233 days on average for decision on their claims. Over the 
next nineteen months, through implementation of the CPI Model 
throughout the entire VBA field organization, we reduced the inventory 
to 253,000 by September 2003. Even more important, we reduced the time 
to provide veterans with decisions on their claims to 156 days.
    That same month a judicial opinion (PVA v. Secretary of Veterans' 
Affairs) was rendered which stated that we could make no negative 
decision on any claim issue for at least one year from the date we 
notify the claimant as to what evidence is needed to support the claim. 
Three months later, in December, the Congress put corrective language 
into effect. By that time the inventory reached 352,000.
    Another factor that has to date prevented us from reducing the 
inventory much further is the increasing number of disability claims 
received each year (674,000 in 2001; 771,000 in 2004; over 800,000 
projected to be received in 2005).
    A further complicating factor in our process is the number of 
disabilities (referred to as claims' ``issues'') veterans are now 
presenting in each of their claims. Prior to a decade or so ago, VBA 
estimated there were 2.5 issues per claim. Today we are seeing higher 
numbers of issues--in many cases, over 10 issues per claim.
    Appeals of claims have also measured slightly more than one would 
expect for the large increase in decisions. That rate too has peaked 
and is coming back down.
    Additionally, remands from the Board of Veterans' Appeals, until 
just very recently, have been growing. Delays in remand processing grew 
as a result of the resource demands of the total growing workload.
    In October 2003, we established the Appeals Management Center 
(AMC), which receives all BVA remands. It is responsible for completing 
all actions possible on these cases, sending only a small number of 
remanded cases in certain specific categories to the regional offices 
for processing. VBA and BVA also undertook joint improvement 
initiatives as a result of a special remand study directed by the 
Deputy Secretary. Through the AMC and the joint initiatives, we have 
reduced the number of cases being remanded by BVA, and we are slowly 
diminishing the inventory of pending remands.
    There is also a large body of work activities which are not 
``rating claims'' but which also take our human resources to 
administer. Not the least of this latter group are Public Contact 
Teams, whose members provide information and assistance to veterans 
over the phone, conduct our extensive outreach programs, and take care 
of the individual veterans who visit our regional offices.
    Over the last 3 years of my tenure as Under Secretary for Benefits, 
VBA has worked hard to achieve consistency across and among all 
regional offices. As you are aware, consistency in disability 
evaluations and payments to veterans has become a very visible concern 
in recent months, and rightfully so.
    The IG's recent investigation found that claims involving more 
objective decisions do, in fact, have close to zero variability. On the 
other hand, the much harder subjective issues, such as PTSD and other 
mental disorders, exhibit variability to a degree that leaves open to 
question the consistency of our evaluations for these conditions.
    Through the implementation of the Task Force recommendations, I 
believe VBA has laid the basic groundwork that will also continue to 
bring more consistency in our claims decisions. As previously 
mentioned, we have made all regional offices consistent in 
organizational structure and work process. Specialized processing 
initiatives have been implemented to consolidate certain types of 
claims in order to provide better and more consistent decisions. VBA is 
now consolidating the rating aspects of our Benefits Delivery at 
Discharge initiative, which will bring greater consistency of decisions 
for newly separated veterans.
    Training, both for new employees and to raise the skill levels of 
the more experienced staff, is obviously key to consistency in our 
rating decisions. VBA deployed new training tools and centralized 
training programs that support greater consistency. New hires receive 
comprehensive training and a consistent foundation in claims processing 
philosophy and principles through a national centralized training 
program called ``Challenge.'' After the initial centralized training, 
employees follow a national standardized training curriculum (full 
lesson plans, handouts, student guides, instructor guides, and slides 
for classroom instruction) available to all regional offices. 
Standardized computer-based tools have been developed for training 
decision makers (53 modules completed and an additional 38 in 
development).
    Training letters and satellite broadcasts on the proper approach to 
rating complex issues have been provided to the field stations. 
Regulations that contain the Schedule for Rating Disabilities are being 
revised to eliminate ambiguous rating criteria and replace them with 
objective rating criteria wherever possible.
    We have stressed giving the ``benefit of the doubt'' to the 
veteran, and every regional office has improved. The average annual 
amount a disabled veteran receives in each State has increased above 
the rate of economic increases.
    While we have made major improvements and laid a strong foundation, 
the Veterans' Benefits Administration continues to face significant 
challenges. The payment variance issue is difficult and complex; our 
every effort is be fair and consistent to all veterans, no matter their 
disability or state of residence. We obviously must continue to improve 
the consistency of disability rating decisions, and we must take 
immediate steps to correct any deficiencies in the adjudication system 
that contribute to inconsistent rating decisions. The Inspector 
General's report has given us a comprehensive assessment of the many 
factors that impact this complex issue; and there is still much work to 
be done to better understand the regional variance in VA compensation 
payments. Our challenge is to ensure that all regional offices are 
generating consistently accurate and timely decisions that provide the 
maximum benefits to which veterans are entitled.
    I believe we must also streamline the appeals process. Any 
assessment of the current appeals process raises serious questions 
about its effectiveness. As many reviews of the appeals process have 
concluded, it lacks finality. The policy and process for addressing 
appeals are provided in statute and regulations, drafted and 
implemented at different times in history, resulting in a complex 
process that consumes a large and increasing portion of finite claims 
processing resources. The process can be improved, and veterans and 
taxpayers can be better served. While VBA shares the greatest 
responsibility for ensuring that the process is fair and timely, 
streamlining the process will depend on increased coordination among 
the various elements within VA as well as cooperation of stakeholders.
    We are continuously challenged to produce more with fewer 
resources. In this era of declining resources across all Federal 
agencies, we will be even further challenged to increase the efficiency 
of our claims processing system. This task is made more difficult by 
the ever-growing complexity of the laws and regulations governing our 
adjudicative process and the fact that veterans today claim more 
disabilities than ever before. We need to continue to make changes in 
our processes, supporting technologies, and organizational structures 
that enable us to produce more and better decisions with fewer 
resources.
    The delivery of benefits to veterans and their families is 
supported by legacy systems that are not interoperable and cannot be 
easily modified to add or enhance applications. Applying the potential 
of today's technologies to our business processes is also a major 
challenge and one we are addressing. Our most immediate technological 
challenge is to migrate benefits processing from the Benefits Delivery 
Network to the VetsNet corporate environment. However, we must also 
continue to work to more fully integrate IT into our daily business 
processes and explore the potential that technology offers for 
expanding the services and access provided to veterans.
    VBA has dedicated and committed employees across this Nation who 
have proven that they are up to these challenges. I am certain the 
changes we have made and will continue to make, the training we have 
done and still need to develop and carry out, as well as the oversight 
we conduct, are making a real difference for the veterans we serve.
    Mr. Chairman, as the Secretary's representative before this 
Committee today, I want to also talk about the work of the Board of 
Veterans' Appeals.
    The mission of the Board has remained unchanged since its inception 
in 1933--to hold hearings and render quality, timely, and final 
decisions in appeals of claims for veterans benefits. The vast majority 
of appeals involve claims for disability compensation benefits, such as 
claims for service connection, an increased rating or survivor's 
benefits.
    The initial decision in benefits claims is made by the Agency of 
Original Jurisdiction or ``AOJ'', typically one of VA's Regional 
Offices or Medical Centers. If that decision is unfavorable, the 
claimant may initiate an appeal by filing a Notice of Disagreement. If 
the appeal is still not resolved, the AOJ will issue a Statement of the 
Case, explaining the rationale for its decision. The claimant then has 
60 days from the issuance of the Statement of the Case to file a 
Substantive Appeal or VA Form 9 to the Board of Veterans' Appeal. At 
this point, the claim is assigned a place on the Board's docket, 
although it still remains under the control of the AOJ, where further 
development and consideration may be required. As claimants have the 
right to a hearing on appeal, the Board will conduct ``Travel Board'' 
hearings at Regional Offices or videoconference hearings, with the 
claimant at the Regional Office and the Veteran Law Judge presiding in 
the Board's offices in Washington, DC. Ultimately, if the claim is not 
fully granted at the AOJ, and after any requested Board hearing has 
occurred, it is then certified and the record transmitted to the Board. 
At this point, the Board has jurisdiction over the appeal.
    By law, the Board generally must review appeals in docket order. 
The vast majority of appellants are represented before the Board by 
veterans service organizations, many of which have appeals units co-
located with the Board. They provide representation at hearings at the 
Board's offices and submit briefs in support of the appeal.
    Once the representative completes his or her presentation, the 
Board reviews the appeal, thoroughly considering all evidence and 
argument presented and all applicable laws, regulations and other legal 
precedents. Board review is de novo--it is based on a fresh look at the 
case. The Board will then issue a written decision. The Board may allow 
or deny a benefit sought, or, if additional development is necessary or 
a procedural defect needs to be cured, it must remand the case back to 
the AOJ to fix the problem. If the Board denies the appeal, the 
claimant's remedies include filing a Notice of Appeal with the United 
States Court of Appeals for Veterans' Claims.
    Information is collected throughout the appeals process, from the 
filing of the Notice of Disagreement to the final resolution of an 
appeal, and is tracked in the Veterans' Appeals Control and Locator 
System, or VACOLS. This database enables VA to collect statistical data 
on every stage of the appeals process, both at the AOJ and the Board. 
It enables VA to measure performance both currently and over time.
    For example, using the VACOLS data, VA can determine the elapsed 
processing time for each segment of the appeals process at each AOJ and 
the Board. VA tracks appeals resolution time--the time it takes from 
the filing of the Notice of Disagreement until the claimant receives a 
final decision on appeal. The Board measures cycle time--the time that 
it actually takes the Board to issue a decision (excluding the time the 
case is with the service organization representative). The Board also 
records decisional quality and the reasons for remanding cases to the 
AOJ.
    The Board's performance, as reflected by the VACOLS data, has 
improved over the years. For example, in Fiscal Year 1994, the Board 
issued about 22,000 decisions. The Board's pending caseload stood at 
47,000, and the measure of timeliness then used--average response 
time--was 781 days.
    By Fiscal Year 1998, the Board's timeliness markedly improved and 
the pending caseload was down to less than 30,000 cases. The Board 
issued 38,886 decisions, and held 4,875 hearings. Appeals resolution 
time was 686 days.
    In fiscal year 2004, the Board issued 38,371 decisions. The Board 
also conducted 7,259 hearings--a substantial increase from 1998. 
Appeals resolution time decreased to 529 days. Cycle time was reduced 
to 98 days. Cases pending at the end of fiscal year 2004 stood at 
28,815. And the Board did this with 43 fewer FTE than in 1998.
    The Board made these improvements despite several significant 
challenges, including the impact of the Veterans' Claims Assistance Act 
of 2000, and the initiation and termination of evidence development at 
the Board due to the decision of the U.S. Court of Appeals for the 
Federal Circuit in Disabled American Veterans' Principi.
    The Board did not do this alone, but had much help from:
     The Congress, providing unqualified support for the 
appellate rights of veterans and their families.
     The veterans' service organizations, which represent about 
85 percent of appellants before the Board.
     VA leadership, that supports improvements in the appeals 
process to ensure that veterans receive timely and quality decisions.
     The staff at the Board, including the Veterans Law Judges, 
counsel, and administrative support staff. Through their efforts, 
productivity increased, over historic levels, by 20 percent for staff 
counsel, and by 25 percent for the VLJs. The number of hearings held 
also increased, with videoconference hearings nearly doubling since 
fiscal year 1998. Finally, the average number of decisions per employee 
increased from 49.9 in fiscal year 1994 and 80.5 in fiscal year 1998, 
to 87.3 in fiscal year 2004.
    Two of the most significant and persistent challenges faced by the 
Board are:
     Eliminating avoidable remands, and
     Increasing productivity to contain and reduce the appeals 
backlog.
    In regard to remands, the Board knows that:
     Veterans want timely and correct decisions on claims for 
benefits. In order to do that, the record must contain all evidence 
necessary to decide the appeal and show that all necessary due process 
has been provided. If the record does not meet these requirements, and 
the benefits sought cannot be granted, a remand for further development 
is necessary.
     Remands significantly lengthen appeals resolution time. A 
remand adds about a year to the process. Remands also divert resources 
from processing other claims and appeals.
     The Board is working with VBA, OGC and VHA to identify and 
track root causes of remands, to provide training, and, ultimately, to 
eliminate avoidable remands. The results are already encouraging, with 
the remand rate for the first part of fiscal year 2005 dropping to 42.6 
percent, as compared to 56.8 percent in fiscal year 2004. For February 
and March 2005, the remand rate was even lower at 38.4 percent. In 
April, it was down to 36 percent.
    If nothing is done, the Board's backlog is projected to grow to 
unacceptable levels. The backlog disposition time--the projected time 
it would take the Board, working at its current rate, to eliminate the 
backlog--would increase from 170 days in 2004, to 391 days in 2006, and 
to nearly 600 days in 2008.
    Through incentives and sound management, the Board has beat past 
projections, and will continue to do so by:
     Eliminating avoidable remands: About 75 percent of cases 
remanded are returned to the Board, which increases the appellate 
workload and degrades timeliness. A 50 percent reduction in remands in 
fiscal year 2005 could reduce appeals resolution time by as much as 25 
to 30 days.
     Strengthening intra-agency partnerships: Joint training 
efforts with VBA, OGC, and VHA, will improve decision quality and 
reduce remands and appeals.
     Writing shorter and more concise decisions: The Board is 
training its Veterans' Law Judges and counsel to write shorter and more 
concise decisions.
     Utilizing employee incentive, mentoring and training 
programs: A number of new programs have been introduced to increase 
employee motivation and satisfaction, as well as to increase 
productivity and decision quality.
     Making use of overtime: The Board will use overtime within 
existing resources to enhance productivity.
     Increasing use of paralegals: The Board will increase the 
use of paralegals for non-decisional support activities.
    The Board believes these measures will work to reduce the backlog 
and shorten the time it takes for a veteran to receive a well-reasoned 
and final Board decision. Already, VA has reduced the time it takes for 
an appeal to be finally resolved from 686 days in fiscal year 1998, to 
529 days in fiscal year 2004. Decision quality at the Board has 
improved from 88.8 percent in fiscal year 1998 to 93 percent in fiscal 
year 2004, and the Board's cycle time is a little over three months.
    The Board of Veterans' appeals will continue working to develop new 
and creative solutions to the challenges faced in order to fulfill its 
statutory mission to hold hearings and provide timely, high quality 
decisions to the Nation's veterans and their families.
    Mr. Chairman, this concludes my testimony. I greatly appreciate 
being here today and look forward to answering your questions.

    Chairman Craig. Thank you, Mr. Secretary. Are claims filed 
by veterans decided on a first-come, first-served basis?
    Adm. Copper. Not specifically. The fact is, when Senator 
Rockefeller chaired the Committee during my confirmation, just 
after we had completed the study, I explained how we were going 
to change the system. One component we have is a ``triage.'' 
With triage, we look at every claim that comes in to see if we 
can satisfy it immediately, rather than delay resolving it.
    If we cannot render an immediate decision, we move on to 
our next processing step, predetermination. We review the claim 
and send a VCAA letter back to the veteran explaining exactly 
what we can do and exactly what he or she should try to do, and 
what type of information is needed to process his or her claim.
    We then send out for the other information we need. When it 
comes in, we compile the information and someone works the 
claim.
    For those severely disabled coming back from OIF/ OEF, we 
have set up what we call ``seamless transition''. When they 
come back and while they are still in the service, we try to 
adjudicate the claim, so that on the day they leave the 
service, the day that we get the DD-214, we will finalize the 
claim and, within approximately 30 days, they will receive 
their first check. Similarly, with the National Guard and 
Reserve, we try to process their claims as fast as we can.
    And finally, for all people who are leaving the service, 
from whatever place, we try to have what we call ``benefits 
delivery at discharge.'' In that system, we request/suggest 
that, if they can get their discharge physical exam--and we 
will help them arrange to get the exam--then we will start 
processing the claim, with the hope that we can have it done by 
the time they are discharged. And that is a system that we are 
trying to expand, so we can get those people as they leave.
    With those exceptions, claims that come in are processed on 
a first-come, first-served basis.
    Chairman Craig. So you are telling me a young man or woman 
coming out of Iraq, injured, ultimately discharged from active 
service or the Guard or Reserve, by the process you have set 
up, goes to the front of the line?
    Adm. Copper. Essentially, goes to the front of the line. 
That is correct, yes, sir.
    Chairman Craig. OK. Many attempts have been made over the 
past decade to fix the delays in the claims processing system. 
More money for staffing has been provided; different management 
techniques--you have discussed some of those--under both 
Democrat and Republican Administrations have been employed.
    I am looking at the numbers here. During the Bush years, we 
have increased funding by about 40 percent, 44 percent in this 
area. This year's budget is awfully close to the independent 
budget, at about 28 percent increase. And yet, the lines seem 
to keep building.
    What haven't we tried? And is there something in the law 
that can be changed to produce a swifter, more accurate 
decision-making process?
    Adm. Copper. First, let me say, if I knew what we hadn't 
tried, I would have certainly made a great effort to try it.
    When Secretary Principi asked me to head a taskforce, he 
told us specifically, ``I want you to look at everything under 
my purview, the changes we can make to do this thing 
properly.'' We certainly attempted to do that.
    I think that the Commission on Disability Claims should be 
looking at the entire process, and trying to understand the 
overall process rather than focusing on its component parts. 
Some of those things will be controversial. But I think the 
Commission needs to study it thoroughly, and then come back 
with recommendations.
    There are obviously things that make the process longer. 
But everything that is in, the law that has been passed, every 
judgment that has been made, in fact has been for the benefit 
of the veterans, as it should be. It occasionally takes us too 
much time to try to understand precisely how to implement it.
    Chairman Craig. Thank you very much. Let me turn to Senator 
Akaka.
    Dan.
    Senator Akaka. Thank you very much, Mr. Chairman. Admiral 
Cooper, it is anticipated that one in five service members 
returning from Iraq and Afghanistan will suffer from some form 
of a stress-related disorder. According to last week's VA 
Inspector General report, stress disorder claims are more 
subjective judgment and create disparities among veterans 
receiving these benefits. What can be done to establish a more 
consistent standard for awarding disability payments for mental 
disabilities?
    Adm. Copper. I think one of the things that the Inspector 
General stated was he was bothered by the disparity from one 
State to another in the rating of claims for PTSD.
    He also was very concerned by the fact that he looked at 
2,100 records that were rated at close to 100 percent due to 
PTSD or individual unemployability, IU. What we are going to 
do, starting a week from Monday, is to call in all of those 
cases that he saw, the 2,100, in which he didn't think the 
stressors were properly shown.
    In order to process a PTSD claim, you first have to find a 
time in the service in which the veteran was exposed to 
something, or a series of things, that would be considered the 
stressor. Then you determine the degree of disability for PTSD. 
So there is essentially a two- or three-step process to go 
through. The final disability rating itself is predicated upon 
the medical examination.
    One of the main things the Inspector General found was that 
our people had not always listed the proper stressor, or 
identified it in such a way that he thought was appropriate. 
Therefore, we feel it is very important that we review all 
2,100 of these to make sure that they are properly adjudicated. 
If they are not, if the stressors are not appropriate, we will 
go back to the veteran and work with him or her, and work with 
the VSO representative and ensure that we get it right.
    During this process we will attempt to get a template that 
will help us review all of our PTSD cases, to ensure that we 
have adjudicated them properly.
    Simultaneously, we are working with VHA, to ensure that 
proper medical templates are available for them to do the 
medical exams, which will then allow VBA to establish the 
degree of disability.
    Senator Akaka. Admiral, claims must be reviewed with 
standard practices and procedures across all 57 ROs. What is VA 
doing to ensure that there is a consistent level of training 
for all claims processes across all VA region offices?
    Adm. Copper. Training is very important, as you know. And 
with my background as a nuclear submariner, I strongly believe 
in training. We have pushed training fairly hard over the last 
8 months. That is why I have imposed certain training 
requirements in each regional office. But more than that, we 
have computer modules that we use to train our workforce in 
different aspects of claims processing.
    We also have centralized training. When we hire new veteran 
service representatives or rating veteran service 
representatives, we put them through centralized training, and 
try to ensure that training continues when they return to their 
regional offices.
    I have also required the regional offices to send me 
reports concerning the training they have carried out and the 
degree to which they have followed our requirements on 
training.
    Finally, I would say to you that, we have improved our 
quality review program. Before we established the claims 
processing taskforce, evaluation of quality was much more 
localized. We immediately decided to centralize quality review 
at one location in Nashville. That gives us a good idea of how 
well each of the 57 regional offices is doing.
    When we identify weaknesses or problems, we provide 
specific feedback to the regional office. And I expect them to 
stress that in their training, ensuring that they correct the 
problem.
    Senator Akaka. Mr. Chairman, my time is nearly up. I have 
other questions.
    Chairman Craig. OK. We will come back for another round.
    Senator Rockefeller.
    Senator Rockefeller. Thank you, Mr. Chairman. I didn't 
intend to ask this question, but the thought of trying to go 
back and determine when the stress in combat--either as it 
relates to mental illness, which I think Senator Akaka was 
referring, or to PTSD--occurred, is complex, I think you would 
agree.
    Adm. Copper. Yes, sir.
    Senator Rockefeller. Because, first, it implies that stress 
may not be accumulated, but it may have arisen only because of 
a series of episodes.
    Adm. Copper. Yes, sir.
    Senator Rockefeller. Maybe some episodes one year, some 
another episode the next year. One of the great experiences, or 
the bad experiences, of the Gulf War Syndrome PTSD awakening 
was that it was very much accumulated--at least, that is the 
way I saw it--that it wasn't necessarily episode based; that 
episodes sometimes lingered simply because of the memory of 
them, even though the episode itself had stopped. I am just 
interested in the formulation of how you determine an episode 
for PTSD or a stressor.
    Adm. Copper. The veteran is usually the one that says, ``I 
received a stressor at this time, or with this unit, during 
this period.'' There are other forms of evidence, by the way, 
such as a combat medal that he might have gotten.
    The VSOs help us verify the evidence. There is also an 
organization down at Fort Belvoir called ``CURR.'' We go to 
them and make sure, for example, that the veteran was a member 
of a unit, that was in fact where he said it was and was in a 
firefight. There are certain very specific requirements and 
steps we must follow to ensure that we establish the stressor.
    Senator Rockefeller. Do you remember what I refer to as the 
``Zumwalt result''? And that was during the Vietnam War. Agent 
Orange was used and it seems to me that it would have been very 
difficult, since it was used quite a lot during certain 
definable periods. Soldiers were the recipient of it. The 
Congress didn't know what to do about it and the Administration 
wasn't doing anything about it.
    It has always interested me--not happily--that it was when 
Admiral Zumwalt's son developed cancer from Agent Orange that 
the Congress decided that we had just better take on Agent 
Orange in general, almost as if it was a presumption, if you 
had cancer and you had been at some time exposed.
    That is a problem which is easier within the coal mines, 
but is not done within the coal mines. Ken Salazar and I would 
probably agree that if you have been working underground--I 
guess you don't do that in Colorado--if you have been working 
underground for 10 years and breathing the dust, there is a 
presumption after 10 years that you have black lung, and the 
Government kicks in. Now, the Government and the Congress, in 
our lack of wisdom, only reimburse 4 percent of those who we 
believe have black lung--money problems. But stress is hard to 
measure.
    Adm. Copper. Yes, sir.
    Senator Rockefeller. In the measuring of it, I am sure the 
expense goes up as a result. But in the measuring of it, also, 
the expense goes up as a result of trying to measure it, and 
perhaps inaccurately.
    I don't actually ask for a question, because I think it is 
not a fair question to you; but if you had any thoughts, they 
would interest me.
    Adm. Copper. I honestly cannot talk to you about measuring 
the effect. I can say that, in order to start the claim for 
PTSD, a stressor is the component you need. You have to have a 
stressor for PTSD. That is pretty well laid down.
    My immediate concern is that we inappropriately identified 
a condition as PTSD, when it might be something else. No doubt, 
the people are ill. The issue is whether the cause is PTSD. We 
had not recorded the stressor, according to the IG, in 25 
percent of the cases. I need to solve that problem and ensure 
we do that part properly.
    And as we do that, then we are working with VHA to make 
sure that we have proper templates for evaluating PTSD. I am 
afraid I didn't answer your question exactly, but I was trying 
to make a point.
    Senator Rockefeller. No, but you have been honest in 
approaching it, and I appreciate that.
    Adm. Copper. Thank you.
    Senator Rockefeller. Thank you, Mr. Chairman.
    Chairman Craig. Senator, thank you.
    Senator Salazar.
    Senator Salazar. Thank you, Mr. Chairman. Admiral Cooper, 
two questions. First, with respect to the Veterans Disability 
Benefits Commission, what kind of guarantees can you give to 
this Committee that it will be a credible effort? Within some 
of the communications that I get in my office there have been 
concerns expressed that the Commission has been created simply 
as a thinly-veiled effort to try to cut back on veterans' 
benefits.
    I think that it is always a worthwhile effort for us to 
examine our processes and to make sure that we have credible 
efforts. And I believe that this is a credible initiative, but 
I would like you to tell us what kind of assurances you can 
give us on that.
    And then the second question that I would like you to 
respond to just has to do with the manpower at the VBA, with 
800,000 claims pending and with the manpower that you have 
assigned to processing those claims; a comment on whether or 
not you believe we have enough resources focused in on the 
problem.
    Adm. Copper. Let me talk about the President's Commission. 
Quite frankly, since I am not of member of the Commission, I 
can't guarantee anything. I've talked to them when they've 
asked me to come, and the next time they meet, I am going to be 
talking to them about claims processing.
    I have been very impressed with the chairman, General 
Scott, and I have seen them in action. Mr. Surratt, who will 
testify next, might be able to give you better insight. They 
certainly seem to be listening carefully.
    I do not know exactly what experience everybody has. Again, 
I imagine Mr. Surratt probably has more experience than 
anybody. But it looks to me like it is a balanced group of 
intelligent people who want to do what can be done.
    We support them, but we are very much ``hands-off.'' If 
they have questions, we answer them at open hearings and that 
sort of thing. So I can't give you a guarantee, but it looks to 
me like it is a professional group that has been put together.
    It looks to me like they tried to do what could be done to 
get people across a broad range. I think one of their 
requirements was that a certain number had to have a combat 
medal--and I forget which one it was--but something that 
indicated that they had in fact been in combat. That is about 
the best answer I can give you on that.
    As far as manpower goes, you know, we put together a budget 
2 years in advance. As a result, when we get an influx of 
claims--it went up 5 percent last year and it looks like it is 
going up 5 percent again this year--we have to go through a 
very careful process to ensure adequate resources. We are doing 
that now.
    I cannot give you a specific answer. I am talking to the 
Secretary about this. And that is really the best answer I can 
give you right now.
    Senator Salazar. Let me just follow up with a question on 
that, then. If claims are up 5 percent last year, another 5 
percent this year, we have a 10 percent increase; and yet the 
manpower within the VBA has not kept up at that same 
proportion. I am certain it has not grown by that level of 10 
percent.
    So in your own mind and in your own calculation, what 
additional resources would you need to be able to process those 
claims in the kind of timely and prompt manner that I am sure 
you would want to?
    Adm. Copper. Again, I can't give you a number. We would 
have to look at it. The IG report certainly indicated that the 
people working out there felt we needed some more. I haven't 
looked at that that closely. But I would like to make one----
    Senator Salazar. Can I just follow up?
    Adm. Copper. Yes, sir.
    Senator Salazar. When would you be in a position where you 
could provide that information to at least this Senator, and 
probably this Committee? I think it is an issue that we would 
very much want an answer to.
    Adm. Copper. Yes, sir. And my answer, honestly, would be 
that after I talk to the Secretary and we look at this together 
and talk it through.
    Senator Salazar. So over the next several months, next 
several weeks?
    Adm. Copper. I can't answer that question. We will be 
talking fairly shortly about the IG report. He and I went out 
to Illinois last week. So it is an ongoing process. I am 
talking with him; I am talking to the Deputy Secretary about 
this. And I cannot give you a specific time.
    Senator Salazar. What I would like to do, Admiral Cooper, 
is to have you get to us the information that essentially 
describes what the gap is in resources that you need to 
effectively process these claims----
    Adm. Copper. Yes, sir.
    Senator Salazar [continuing]. Given the unanticipated surge 
that we have had in both last year's claims and this year's 
claims. And I am sure that, I mean, since you are working at 
it----
    Adm. Copper. Yes, sir.
    Senator Salazar [continuing]. At the appropriate time, if 
you would get that information to us, I very much would 
appreciate it.
    Adm. Copper. Sure. Could I please address one more thing?
    Senator Salazar. Yes, sir.
    Adm. Copper. You mentioned in your discussion that our 
workload increased by 80,000 cases since September of 2003. 
September of 2003 was the time that the court made the decision 
that, for 3 months we could not make any decisions that were 
negative. In other words, if a veteran had an issue and we 
found--let's say he had five issues, and we had two of them we 
could find affirmatively, and three of them we had to say 
``No.'' We could go back with the two affirmative; we could not 
go back with the three to say ``No.'' And that happened for 3 
months.
    And by the end of that 3 months, we had gone from 253,000 
to 352,000. Today, we are at 340,000, and I am having 
difficulty getting that down. But I wanted to put it in 
context, because that jump was for quite a specific reason.
    Senator Salazar. OK. Well, I thank you for that.
    Adm. Copper. That does not remove my problem, but I just 
wanted to put that in perspective.
    Senator Salazar. Thank you very much, Admiral Cooper.
    Adm. Copper. Yes, sir.
    Chairman Craig. Thank you.
    Senator Murray.
    Senator Murray. Thank you, Mr. Chairman. Admiral Cooper, we 
have in Washington State thousands of guardsmen and reserves 
who are coming home now. And I am very concerned about the 
limited access to the VA the 2-year period will have on their 
eventual compensation. Are you concerned that that short amount 
of time will limit their ability to assess their injuries and 
get compensated?
    Adm. Copper. I think your question addresses the medical 
treatment that they get for the 2 years. That should not affect 
any claim they make to us. We should be able to handle their 
disability claims in a very appropriate time. Unfortunately, 
our processing time is too long right now, but we should be 
able to handle them appropriately and to our best ability. That 
2-year open period to use medical services should not impact my 
work at all.
    Senator Murray. And to be able to give them compensation?
    Adm. Copper. Yes, ma'am.
    Senator Murray. OK. Can you tell me, there is not a large 
number, but there are a number of veterans who are maybe 
winning a case, but dying before receiving compensation. And 
Secretary Principi had told us the VA was going to examine 
whether that law should be changed to allow the estates of 
veterans to collect back benefit awards. Is that something that 
you are still considering?
    Adm. Copper. I am sorry, I have not been involved in that. 
I cannot answer that question. I am not aware of anything going 
on right now. However, one of the things we did do, coming out 
of our taskforce, we established a ``tiger team'' in Cleveland, 
looking at, particularly at that time, veterans who were at 
least 70 years old and had a claim pending for more than 1 
year.
    I think there were 10,000 to 12,000 at that time. That is 
now down to about 2,000.
    Mr. Epley maybe can add to that.
    Senator Murray. OK.
    Mr. Epley. I think that we can address it partially, 
Senator. There have been laws on the books for years that allow 
us to pay accrued benefits if a veteran had a claim and all the 
evidence was in the VA's hands at the time the veteran passed 
away.
    There has been until recently a 2-year limit on the accrued 
benefits, but I believe a year ago Congress passed legislation 
to liberalize that and extend it.
    Senator Murray. OK.
    Adm. Copper. I am sorry. I had forgotten that.
    Senator Murray. OK. Very good. I would like to ask if you 
are noticing whether any of our veterans are seeking less 
medical care once they are determined to be 100 percent 
disabled?
    Adm. Copper. I, personally, cannot address that. That, of 
course, is what the IG said. The IG seemed to feel that there 
was a certain percentage of those they looked at who had not 
gone back for the PTSD treatment. But I can do no more than 
look up what the IG said.
    Senator Murray. So you don't know whether it is true or 
not? You just have the IG report?
    Adm. Copper. I have the Inspector General's report. I have 
no reason to think that what he said is not true. I just don't 
have any personal knowledge.
    Senator Murray. OK. Well, let me then ask you what lessons 
you think we can learn from the current appeals process, so we 
can make sure that our servicemen and women don't go through 
this grueling process 20, 30, 40 years from now.
    Adm. Copper. I would say the Presidential Commission has to 
look at the appeals process and determine what can be done to 
improve it. I want to reiterate that everything that has been 
done has been to help the veterans and to make sure they get a 
chance to provide evidence to support their claims.
    It is more difficult if, during the appeal process a 
veteran submits new information to BVA. There is a concern 
whether there, should be some kind of a limit on how often, how 
long in the process, more information can be added?
    What I would like is to have all the information come to 
us, and let us make the decision. Now, there may be many 
reasons for not closing the record, and I am not judging that. 
I am merely saying that that is something that at least should 
be looked at.
    Senator Murray. OK.
    Adm. Copper. A second thing is, the average you see is an 
average time for processing a claim. Over the last few years we 
have gotten claims from veterans from World War II.
    These claims take more time because we have to retrieve 
their records from the Records Maintenance Center. It is very 
difficult sometimes to get records. That extends the process.
    Senator Murray. So are we doing something right now with 
the soldiers who are returning, to have their records be in a 
better spot, in a better place, and better accessible?
    Adm. Copper. Yes, we are. We have our own records center, a 
records center for veterans that we started up about 13 years 
ago in Saint Louis, called ``Records Maintenance Center.''
    The third thing that I think is really important, and the 
thing that I am pleased with, is our benefits delivery at 
discharge program. If we can get the individual the minute he 
leaves the service, we then have his record, we have his first 
claim, and we have whatever is needed to adjudicate the claim. 
And then later on, if he reopens his claim we have the record 
readily available.
    One of the things we have done to better utilize our 
personnel resources is to have two primary adjudication 
centers. We take claims in 140 separate benefits delivery at 
discharge sites. We will send them to one of two places--Salt 
Lake City, Utah or Winston Salem, North Carolina--and have them 
adjudicated. That should give us more consistency and help us 
make better use of the people we have.
    That is one thing we are trying to do to improve 
processing. I really think that getting these claims as soon as 
the person is discharged is important. The second point I would 
make is that we are working with OSD now to a degree I have not 
seen before, so that they will help us, in getting the records. 
I can foresee that, within a few years, we will be able to 
electronically get records from OSD that will further expedite 
the system.
    Senator Murray. OK. Thank you very much, Mr. Chairman.
    Chairman Craig. Patty, thank you very much.
    Senator, Burr, questions?
    Senator Burr. Thank you, Mr. Chairman. Admiral, I am going 
to be somewhat pointed, so please don't take it personally. My 
colleagues have been very kind in the way they have stated some 
things. Do we have a problem?
    Adm. Copper. Yes.
    Senator Burr. When are we going to fix it?
    Adm. Copper. That's a harder question. The fact is, we have 
been trying. We have been doing a lot of things to improve the 
process. We have been doing a lot of things to get consistency. 
We are looking at several different things to attempt to 
resolve the problem.
    Senator Burr. I asked both the Secretary in his 
confirmation hearings and Dr. Perlin when he came before the 
Committee, looking at the veterans that are going to be coming 
back, looking at the amount of deployment, if we looked at the 
resources that we are going to need to take care of this 
population----
    Adm. Copper. I believe that we will be--I'm sorry.
    Senator Burr. Well, let me just say this. Their answer was 
``Yes.''
    Adm. Copper. I believe we have the resources to take care 
of them as they are going through the seamless transition or 
benefits delivery at discharge. But right now that is a small 
percentage of the case load.
    More than half--57.9 percent, I think was the amount--of 
claims we get are reopened claims, from veterans who have 
already gotten their initial claims decision and are coming 
back, either because they have other conditions that they think 
are a result of their service--or their condition has 
deteriorated.
    Senator Burr. And I understand that, and I think every 
member understands that. And, we are willing to work with you 
for whatever tools or changes you need to be able to handle 
that. Because we give them that right.
    Adm. Copper. Yes, sir.
    Senator Burr. And that may be the subject of discussion in 
this Committee, as to whether we change that. But I guess my 
point is, have you got the resources you need to be able to 
handle the claims?
    When I ask about North Carolina--I happen to be that 
Winston Salem connection, as you know--North Carolina is now 
the No. 1 spot for military retirees in the country, enough so 
that we have nine new clinics at least targeted. Given the 
trend, I know we are going to need them.
    Given your trend of increases in claims, I guess my 
question is simple: Are we asking for everything we need to be 
able to handle something that is not going to change short 
term, and probably not going to change long term, given what we 
know today?
    Adm. Copper. My answer is that we are going through the 
process right now to figure out what resources are needed. I am 
working with the Secretary. I do not have a specific answer.
    Obviously, if you increase claims 5 percent every year, and 
if I am going to review lots of records, as required by the IG 
report, then I think it is pretty obvious that I am going to be 
stretched pretty thin.
    I would like to say that, we have very good people, and we 
hold them to good standards of accountability. I am sorry 
Senator Rockefeller isn't here because, at my confirmation he 
said, ``Well, what are you going to do if people don't carry 
out this plan that you say you are proposing?'' And I responded 
that I would allow them to broaden their horizons and find jobs 
somewhere else. And we have in fact in a couple of cases done 
that.
    I think we have done many things to ensure that we operate 
as efficiently as we can, and continue to look at what more we 
can do. BDD being a primary example. We are also looking at 
consolidation of some activities that will help us be more 
efficient.
    Senator Burr. And the one thing that I would like to stress 
on you and those individuals involved is that there is 
somebody, if not multiple people, in our offices that lives 
each one of these claims with each one of these veterans. Some 
are handled quickly, and we are heroes. Some are a little more 
difficult and, because of the good people you have and the good 
people we have, we find some resolution to it, and all parties 
are happy.
    You know, the only ones that are troubling are the ones 
that you can't seem to resolve. I know that has to be 
frustrating for you, but it is extremely frustrating for us. 
And I don't think that we can touch the frustration level of 
the veteran. That process that may go from BVA to the appeals 
management center, only to never be heard from again.
    I have one that my staff shared with me this morning that 
has been at the appeals management center since the mid-part of 
2003. Now, I don't know whether that is a process problem; I 
don't know whether it is the intricacies of the case. But that 
is an impossible thing to explain for 2 years.
    Adm. Copper. And I would say our goal is to treat every 
veteran as an individual. I emphasize to my people that we must 
treat each and every veteran individually.
    I would like you to give me the name, and I will find out 
the status of the claim.
    On the other hand, we have to remember that every claim and 
every issue is not necessarily satisfactorily resolved, because 
there are differences of opinion. It may be that we cannot tie 
a particular ailment to service. We always have to have a 
nexus, a connection to something that happened in service or 
got worse while that individual was in the service.
    Sometimes when I hear about a case that went to a regional 
office and they said ``No'' on that issue, and then the DRO 
said ``No'' on the issue, and a third time we said ``No,'' and 
then we sent it to BVA and they said ``No,'' somewhere in there 
I have to think maybe the claim was not a valid claim, for 
whatever reason. This is a difficult, complex process and we 
will continue to do everything we can to do it right.
    Senator Burr. And I can only speak for myself, but let me 
assure you that the individuals that are denied are usually the 
ones that my staff asked me to call.
    Adm. Copper. Yes, sir.
    Senator Burr. So they talk to us after they have talked to 
you. We are the ones that try to explain that there is a point 
in time where everything has been exhausted. So we are not 
disconnected from the stress or the emotion of what these 
individuals go through.
    I had one last question, but I am going to give it to you 
in the form of a suggestion.
    Adm. Copper. Yes, sir.
    Senator Burr. And that is, I know you have got to get back 
to us on staffing and on funding. But let's make sure that 
those claims officers have the training, have the continual 
education that they need to deliver that constituency accurate 
decisions.
    I think there can be a tendency to bring good people in and 
not to allow them to continue to grow, because we either, don't 
provide the educationm or the training, or we just don't 
provide the time for them to take advantage of the education 
and training. And I think when you look at every successful 
model around, you find if that is eliminated your level of 
success continues to decline.
    Adm. Copper. I absolutely agree.
    Senator Burr. I thank you for being here today.
    Adm. Copper. Thank you.
    Senator Burr. Thank you, Mr. Chairman.
    Chairman Craig. Thank you, Richard.
    Admiral, I asked you the question about today's soon-to-be 
or are-now-just veterans coming out, and you said they move to 
the front of the line. What happens if it is 6 months or 7 
months out when they decide they have a problem and they apply 
to the VA for assistance?
    Adm. Copper. I think they would fall in line with everybody 
else at that point. I would like to comment further.
    Chairman Craig. Yes.
    Adm. Copper. We have really increased outreach. That is one 
of the things we are using some of our people for, to reach out 
to these people at the National Guard centers and at the 
Reserve centers. We have 57 regional offices and I have told 
them that they have to be in contact with these centers so 
that, when the people come back, we are there to tell them all 
about the benefits that are available and how to apply for 
them, and encourage them if they think they have a problem.
    Chairman Craig. OK. The IG's report also found a 107 
percent increase over the past 6 years in the so-called 
``individual unemployability claims.'' What accounts for the 
increase in these claims?
    Adm. Copper. I honestly can't tell you what accounts for 
it. These are people who must have a certain degree of 
disability. If they cannot be employed because of their 
disability, then they can get IU. That is one of the things 
that we have to look at, to ensure that in some places we have 
not gotten careless in our allowing IU. That is one of the 
things I have to do in the review that we are going to do.
    I cannot tell you why it would increase, unless we have 
gotten a little bit careless and therefore it has been seen as 
a thing that could be done and would benefit the veteran.
    Chairman Craig. Does an employment specialist who works 
with the individuals with disability make the determination as 
to IU?
    Adm. Copper. No, sir. No, sir.
    Chairman Craig. How is that made?
    Adm. Copper. The employment specialist works in the 
Vocational Rehabilitation and Employment Service. The 
employment specialist works with the veteran to help him or her 
find employment suitable to their condition.
    Now, let me give you an interesting fact that I learned 
this morning. Over the last year, about 7,000 veterans who were 
in the Vocational Rehabilitation program withdrew voluntarily. 
Maybe they got a job other than the one they were being trained 
for. Maybe they wanted to do something else. About 400 of them 
had gotten IU and then withdrew from the program.
    We are trying to see if people might withdraw from this voc 
rehab program because they have been granted IU. But I think 
that number, 400 out of 7,000 or so shows that there were many 
more who continued on in the voc rehab program.
    Mr. Epley. If I could add?
    Chairman Craig. Mr. Epley.
    Mr. Epley. In addition to that, we have asked our 
disability compensation program staff to sit down and work more 
closely with the vocational rehabilitation staff, to address 
that very issue, Mr. Chairman; to make sure that, as a rating 
specialist in the disability program, the specialist is 
considering individual unemployability, based on records that 
show they may not be able to sustain employment, that we will 
make referral and have discussions with the vocational staff at 
the same time.
    Chairman Craig. OK. We talk about the 800,000 claims from 
veterans this year. How many disabilities within those claims 
will require a VA decision?
    Adm. Copper. Every single one of them.
    Chairman Craig. Is the trend of disabilities filed per 
claim increasing?
    Adm. Copper. Absolutely. For example, several years ago, 
somebody figured it to be somewhere between 2.0 and 2.5 issues 
per claim. It looks to me that our average is now closer to 
four issues per claim.
    The data from the benefits delivery at discharge sites is 
even more startling. Last week I became aware that, for all of 
the BDD claims that have gone to Salt Lake City in the last 6 
months, the average number of issues is 10.2. These are people 
retiring and people being discharged from the service.
    Chairman Craig. So what can I draw from that? Is that 
800,000 number a true measure of your workload? Or is that a 
measurement of the number of claims? That does not therefore 
represent individuals?
    Adm. Copper. That is correct.
    Chairman Craig. Is that correct?
    Adm. Copper. It represents individuals. It doesn't 
represent the true work----
    Chairman Craig. All right.
    Adm. Cooper [continuing]. Because each individual will have 
``X''-number of issues, and each issue has to be adjudicated 
with a concomitant medical exam and gathered of information. So 
I would like to be able to measure my workload based on the 
number of issues that we are adjudicating rather than the 
number of individual veterans' claim.
    If a veteran claims five disabilities, and we say ``Yes'' 
on two of them and ``No'' on three of them have we favorably 
considered the claim, or have we negatively considered the 
claim? There are lots of ramifications depending on how you 
answer this.
    We expect 800,000 claims to come in this year. Right now 
our pending workload is just under 340,000. I think, a standard 
inventory on hand should be about 250,000. I think 250,000 is a 
good inventory for the number of people I have. The ``backlog'' 
I consider the amount above the 250,000--or currently, 80,000 
to 90,000. That is what I am trying to eliminate.
    I think we would have a better handle on the actual 
workload if we counted issues. And I don't know quite how to do 
that yet, but I hope to do that sometime during my tenure at 
VA.
    Chairman Craig. Thank you.
    Senator Akaka, additional questions?
    Senator Akaka. Thank you, Mr. Chairman. The Government 
Accountability Office recommended that the Secretary develop a 
plan to be included in the Department of Veterans' Affairs 
annual performance plan, that describes how VA intends to use 
data from the Rating Board Automation 2000.
    GAO also recommended that VA conduct studies of impairments 
for which RBA 2000 data reveal inconsistencies among VA 
regional offices. GAO states that one year of RBA 2000 data 
would suffice before conducting this study.
    Admiral, can you please tell the Committee if the Secretary 
has developed such a plan?
    Adm. Copper. We have a plan. RBA 2000 is one of our IT 
systems that has been under development for the last 3 years. 
About 6 months ago, I said that from now on, everybody will use 
RBA 2000 to adjudicate a claim. So we are all now using it.
    GAO feels that we have no effective way to measure 
consistency. However, we feel with the extra capability of RBA 
2000, we can better determine how to assess consistency, and 
will.
    We are working the plan now. We still have to gather a good 
bit of data before I can determine just how well we are doing. 
But, yes, we are proceeding down that road.
    Senator Akaka. According to the recent VA Inspector General 
report, veterans who are represented by a veterans service 
organization receive an average of $6,225 more in compensation 
per year than those without representation. What can we do to 
ensure that all veterans submitting a disability claim receive 
appropriate compensation, regardless of whether they have 
representation or not?
    Adm. Copper. We absolutely should do that. But, let me say 
first that I believe we are talking about figures over a period 
of 50 to 60 years. I think when we consider just the last 
couple of years, the difference is about $1,700.
    I would say to you, we have very competent VSOs out there, 
and obviously they know the system very well. And if the 
veteran has a valid claim, they will help that veteran get all 
the records and evidence that he needs to help us adjudicate 
the claim. It is not that we don't want to do everything we can 
for the veteran, and we are required by the VCAA law to do so. 
But veterans service organizations are extremely competent and 
good in helping the veteran understand what needs to be done.
    My personal goal is to continue to work very closely with 
VSOs and ensure that we do give the veteran everything that he 
deserves.
    Senator Akaka. Admiral, can you explain BVA and its system 
for docketing cases? I can understand that BVA generally 
decides appeals in the order in which they are received from VA 
regional offices. When a case is received from a regional 
office, it is given a docket number.
    If that case is later appealed to the Court of Appeals for 
Veterans' Claims and remanded back to the BVA, it appears that 
BVA issues a new docket number, and that veteran goes to the 
back of the line at BVA, rather than retaining its earlier 
docket number and receiving near immediate review. This can add 
as much as 3 to 5 years to the veteran's claim being resolved.
    My question to you is, do you support remanded cases 
retaining their original docket numbers in order to reduce 
lengthy waits for final decisions?
    Adm. Copper. Senator, I would like to ask my friend, Mr. 
Garvin, to address that question from BVA.
    Mr. Garvin. Yes, sir. And there is a procedure, when a case 
is remanded back to the Board, where a motion may be entered to 
have that case retain its original docket number. And perhaps 
what we need to look at is our educational program, so that we 
ensure that both the applicants and the VSOs are aware of that.
    Senator Akaka. Well, I want to thank Mr. Garvin and Mr. 
Epley for their responses, and especially Admiral Cooper. Thank 
you very much.
    Adm. Copper. Thank you, sir.
    Chairman Craig. Danny, thank you.
    Richard, do you have any further questions?
    Senator Burr. Mr. Chairman, just one, with Mr. Garvin's 
last answer. Why would it get a new number? Take for granted 
all of them get new numbers if they are coming back through the 
system, if there is an appeal, a further appeal? Is that what 
you are saying?
    Mr. Garvin. When a case comes to the Board, it is assigned 
a docket number. And it is assigned a docket number in 
accordance with when it is certified ready for the Board to 
take action on the appeal.
    Senator Burr. Is there anybody that wouldn't want their 
concern heard quickly?
    Mr. Garvin. I doubt it.
    Senator Burr. But not all of them request the current 
docket number to remain?
    Mr. Garvin. That is correct. We will take a look at that.
    Senator Burr. Thank you.
    Mr. Garvin. Yes, sir.
    Chairman Craig. Admiral, thank you very much. Mr. Epley, 
Mr. Garvin, thank you for your testimony.
    Adm. Copper. Thank you.
    Chairman Craig. Before you leave, a bit of admonishment, if 
I can, and it is about the 48-hour rule on testimony that we 
are striving to achieve with all of you. And I say that because 
the agency was notified of this hearing more than 3 weeks ago, 
and the Secretary received notice 2 weeks ago. Your testimony 
arrived last night at 5:45. It is very difficult at that point 
for my staff to effectively review it and prepare us for the 
hearing held this afternoon. They spent into the night, working 
on that testimony.
    So I guess I am sending what I hope is a clear message. 
Because we will have a good many more hearings over the course 
of the next couple of years, working cooperatively with you and 
other divisions of the Veterans' Affairs, to respond to our 
veterans. And timeliness is critical and important for us to be 
effective and to prepare. And I would hope you would take that 
back with you, Admiral, to your colleagues.
    Adm. Copper. I sincerely apologize.
    Chairman Craig. Thank you. Thank you very much for being 
here.
    Now let me invite our second panel forward, please. The 
Committee has looked forward to this panel, because it presents 
us with a broad array of experience in the area that we are 
focusing on today.
    And first, we will lead with the Honorable Kenneth B. 
Kramer, former Chief Judge for the U.S. Court of Appeals for 
Veterans' Claims, and a former colleague of mine in the U.S. 
House a good number of years ago.
    Judge Kramer, we are pleased to have you before the 
Committee. Please proceed.

 STATEMENT OF HON. KENNETH B. KRAMER, FORMER CHIEF JUDGE, U.S. 
              COURT OF APPEALS FOR VETERANS CLAIMS

    Mr. Kramer. Mr. Chairman, Ranking Member Akaka, Senator 
Burr, it is an honor for me to be here with some old friends. 
Senator Akaka, I brought my wife here, who was born in Hawaii, 
for assistance, so I may call on her if I get in trouble.
    My testimony is going to be centered around my personal 
observations as a judge for 15 years. I didn't do a huge amount 
of research, and I don't have a lot of statistics. It is just 
things that have been embedded in my mind over the years. And I 
want to make it clear that I speak only for myself, and not for 
the court.
    I have three major recommendations that I am going to make 
to fix one of the largest, if not the largest problem of all, 
as I see it in the adjudication system. And that is the 
constant, never-ending cycle of remands back and forth, passing 
of papers, among four levels of decisionmakers. These levels 
are the regional office; the Board of Veterans' Appeals; our 
court, which is the U.S. Court of Appeals for Veterans' Claims; 
and another Federal appellate court, the U.S. Court of Appeals 
for the Federal Circuit.
    What I am going to suggest are not perfect solutions. But I 
see them as possible starting points to addressing the backlog 
problem.
    My first suggestion is very specific. And that is to amend 
38 U.S.C. Sec. 5103A(2)(d)(B)--to make it crystal clear when a 
claimant is entitled to a VA medical opinion, which will 
address the causative relationship between present disability 
and military service.
    This issue is by far the most critical in most compensation 
and cause of death cases. And I believe that obtaining such an 
opinion at the earliest possible time will save huge amounts of 
work, litigation, and time.
    I would suggest that the Committee consider providing for 
such an opinion when the following factors are present: there 
is evidence of both present disability or death and a possible 
causative event in service; there has been a denial of the 
claim based on no nexus evidence; and a notice of disagreement 
has been filed to this denial.
    My second and third recommendations are a little more 
systemic and a little more general. I believe that the time has 
come to decentralize high-level VA decisionmaking, so as to 
require a formal administrative law decision at the RO level--
that is, the local level--before an appeal can ever be brought 
to the Board, and then only after a claimant has gone back to 
the administrative law judge with a proper motion either 
averring specific errors in that administrative law judge 
decision, or showing that the claimant can offer evidence that 
might affect the result.
    Before rendering an initial decision, the ALJ would be 
required to ensure that VA's duty to assist has been carried 
out. If the initial decision was adverse, the claimant would be 
permitted to hire counsel to file the motion with the ALJ or, 
if that failed, to appeal to the Board. That appeal also would 
have to specify specific errors in the ALJ decision, not just a 
general disagreement with the result, as is presently the case 
today.
    My third recommendation goes solely only to judicial 
review. I believe that independent judicial review has made a 
huge difference in the quality of VA decisionmaking. Now 
decisions are based on evidence of record, and they must be 
analyzed. And the decisions that the VA produces are far better 
today than they were when I first became a judge.
    That said, I believe, personally, that judicial review is a 
real part of the problem in finalizing claims. Under existing 
law, there are four levels--four--of possible appellate appeal: 
an administrative appeal to the Board, to the BVA; and three 
levels of judicial appeal, to our court, to the Federal 
Circuit, and possibly to the Supreme Court.
    I recommend that the Federal Circuit be removed from this 
process. Our court is the real expert in veterans law, not 
because the caliber of its people are better in any way than 
the Federal Circuit, which has the highest quality of people, 
but simply because the work of our court is full-time in the 
veterans area; while the Federal Circuit's work is part-time, 
its main thrust being intellectual property law.
    The Federal Circuit was originally put into the process 
when the court was created because of fears that the veterans 
court, as an Article I court, might be captured by its 
constituents, and that Article III review by the Federal 
Circuit would ensure that didn't happen.
    With 15 years of decisionmaking under the belt, those 
fears, I believe, have never materialized. Although one could 
argue that it is good to give a party which has lost at the 
court, my court--and that is either a claimant or the 
Government--one more bite at the apple, the further delay--
which means about 2 more years of time before the Federal 
Circuit will render an opinion and, if that case is remanded 
back to our court, at least an additional year of time--and the 
confusion that results from inconsistent court decisions, 
simply provides more justice than the system can bear. I truly 
believe that justice delayed is justice denied.
    The organic law of the only other Article I appellate 
court, the U.S. Court of Appeals for the Armed Forces, has 
provided for direct appeal from it to the Supreme Court for 
more than half a century.
    I further recommend that our court's organic law be 
changed, so that where a fully-developed evidentiary record 
clearly reflects entitlement to a benefit or clearly reflects a 
claimant's inability to succeed, in spite of otherwise 
remandable BVA error, that the court should end the matter with 
either a benefit award or an affirmance based on non-
prejudicial BVA error.
    Thank you for the opportunity to be heard. If I can be of 
further assistance in providing our veterans with the best 
justice system possible, I stand ready to help in any way I 
can.
    [The prepared statement of Mr. Kramer follows:]
    Prepared Statement Hon. Kenneth B. Kramer, Former Chief Judge, 
               U.S. Court of Appeals for Veterans Claims
    Mr. Chairman, Ranking Member Akaka, and Members of the Committee:
    It is an honor to be asked to provide my thoughts as to how the VA 
claims adjudication and appeal process might be able to provide more 
timely and accurate decisions. My suggestions are based upon my 
personal observations growing out of a career in which I have had the 
privilege of serving first in the military and then as a civilian in 
all three branches of the Federal Government. The last 15 years of my 
service was as a Judge of the U.S. Court of Appeals for Veterans' 
Claims (Court), the last four of which was as Chief Judge, the position 
from which I retired last fall.
    As preliminary matters, I want to make sure that it is understood 
that I speak only for myself, not for the Court, and that my remarks 
are not in any way meant to be critical of any individual or 
institution but only directed to what I see are systemic problems that 
no individual or institution could remedy without statutory changes. I 
also want to make sure that it is understood that I do not pretend to 
offer perfect solutions, only starting points to fixing the major 
problem as I see it--the almost never-ending cycles of both Board of 
Veterans' Appeals (BVA) and Court ordered remands in far too many 
cases. These remands clog the system and prevent timely justice for all 
claimants, those who are trapped in the remands themselves and those 
who wait for those who are trapped. Lastly, I congratulate the 
Committee for its willingness to begin to take on the challenge of 
changing a system that has already been the subject of significant 
study and its recognition that, despite that study, the system is still 
plagued by backlog and delay and the frustration that accompany them. 
Making major changes will not be easy--there will be opposition from 
those feeling threatened by new ways of doing business, but I believe 
that, if all the stakeholders are permitted to participate actively in 
crafting these changes, they can happen.
    I have three major recommendations, the first of which would affect 
both the administrative and judicial processes, the second of which 
would affect primarily the former, and the third of which would affect 
primarily the latter.
    1. Despite the controversy and resources expended over the former 
requirement of a claimant having to present a well-grounded claim 
before being entitled to the VA-provided duty to assist, and despite 
the controversy and resources already expended in the purported fixing 
of the problem, it appears that little has changed regarding what is, 
in most cases, the major need for such a duty: That is, to provide a 
thorough medical opinion as to the causative relationship between 
present disability and military service. Indeed, it appears that 38 
U.S.C. Sec. 5103A(d)(2)(B), in essence, reimposes a well-grounding 
requirement to obtain such an opinion. To avoid much future litigation 
and future cycles of both BVA and Court ordered remands, this provision 
should be clarified.
    Where causation is at issue, I believe that obtaining a medical 
opinion on this issue at the earliest possible time in the claims 
process would likewise result in much earlier finalization. One 
approach could be that once there is evidence of both present 
disability and a possible event in service, a claimant would be 
entitled to such an opinion.
    Needless to say, this would put a heavy burden on VA, but I would 
be hopeful that both cost and emotional savings from early resolutions, 
would offset the expenditures and reorganization that such a change 
would require. One possible quick fix would be for every VA physician 
treating a new condition to fill out a standard form addressing 
causation including possible comment on the need for the consideration 
of additional documentation prior to rendering an opinion.
    2. I have seen too many claims that have remained in the VA 
administrative system despite the passage of more than a decade. Many 
of these are caught in a cycle of remands between a VA regional office 
(RO) and the BVA and the confusion and bureaucracy that is created by 
the back and forth transmission of documents. And many times the 
claimants are themselves part of the problem by continuously sending in 
more and more papers that in turn result in delay and frequently new 
adjudications.
    In my view, in keeping with the theme expressed in my preceding 
recommendation, the adjudicative objective should be to finalize as 
many claims as possible at the RO level. In order better to achieve 
this objective, I also recommend that Administrative Law Judges (ALJs) 
or, at a minimum, Veterans Law Judges (VLJs), working at the final 
stage of RO adjudication where there is claimant disagreement, should 
insure that all necessary development has taken place and that, in the 
event of such a judge's continuing denial, should prepare, in lieu of a 
Statement of the Case, a decision as thorough as one now prepared by 
the BVA. In essence, what is being suggested is to decentralize high 
level administrative decisionmaking. (I would also note that the VA 
itself has taken initial steps in this direction by implementing a 
voluntary Decision Review Officer program staffed by more experienced 
adjudicators.)
    Once such a decision was rendered, only formal motions that 
specified and articulated errors in the decision or made offers of 
proof would be accepted by the ALJ or VLJ. In such event, claimants 
would be permitted to hire counsel, if they chose to do so, to file 
such motions. Under present law, counsel may only be retained after an 
adverse BVA decision. Some will oppose such a change as upsetting the 
non-adversarial agency process, which in my mind is illusory once you 
have said ``no'' to a claimant. Permitting such a motion prior to an 
appeal to the BVA would allow for additional building of the 
evidentiary record often critical to success. Only after the 
prerequisite motion had been filed and a response from the ALJ/VLJ 
resulted in continuing denial would an appeal to the BVA be allowed. At 
this point, the record would be closed and no further evidentiary 
submissions could be made.
    The approach suggested here will likely require many more ALJs or 
VLJs than the number of VLJs presently at the Board. Some will come 
from the present Board but others will have to be hired along with 
staff. Thus, as with the additional expenditures and reorganization of 
the medical side of the house likely needed for the implementation of 
my first recommendation, this recommendation also will carry with it 
additional expenditures and the need for reorganization of the 
adjudicative side of the house. Nevertheless, it is possible that here, 
too, overall savings will result by removing vast amounts of paper and 
vast numbers of the adjudicative hours required by the present system.
    3. I am a big believer in the success of independent judicial 
review. It has caused VA decisionmaking to be light years ahead of 
where it was before such review by requiring that decisions be based on 
the real evidence and hard analysis, often previously missing. The 
bottom line is that judicial review has done much to bring about 
accurate decisions and helped insure fairness to our nation's veterans.
    That said, judicial review has done little, if anything, to improve 
timeliness and, indeed, viewed objectively, can be seen as a real part 
of the problem. In the worst case, which happens more than 
occasionally, a veteran dies, leaving a case unresolved. Just as the 
administrative process itself is involved in the ever-revolving RO-BVA 
two-step, judicial review turns that two-step into a four-step, adding 
on additional years to the process with a cycle of remands between the 
U.S. Court of Appeals for the Federal Circuit (Federal Circuit) and the 
Court and between the Court and the BVA. As to the latter, I myself 
have seen too many cases come back to the Court after two previous 
Court remands to the BVA and the passage of nearly a decade since the 
initial appeal to the Court was first brought. As to the former, an 
appeal to the Federal Circuit from the Court often carries with it 2 
more years of the claimant's life; and in the event of a Federal 
Circuit remand back to the Court, I would estimate that another year 
can be added on, to say nothing of the additional years that will be 
involved if the Court in turn remands the case back to the BVA.
    Under existing law, there are four levels of possible appeal--one 
administrative appeal to the BVA and three levels of judicial 
involvement: The Court, the Federal Circuit, and the Supreme Court. 
Stated simply, this is more ``justice'' than the system can properly 
bear. Indeed, justice delayed is justice denied and the timeliness 
problem cannot be fixed without reforming the judicial process.
    There is no compelling reason to have so many layers of judicial 
review. The only fathomable argument in support is that the party who 
has lost at the Court will have one more opportunity to demonstrate the 
rightness of that party's view. Although there is no question that the 
Court does make mistakes and is not omniscient, the same is true of the 
Federal Circuit. Indeed, the Court has far greater expertise in 
veterans' law. This capability is an outgrowth of nothing more 
complicated than the fact that this subject is the Court's sole 
business, while it is only a part-time focus of the Federal Circuit. 
Moreover, the reality of confusion over conflicting judicial decisions 
is directly proportionate to the number of judicial bodies involved in 
the process.
    In my view, the best fix would be to make the Court, in all 
respects, the final arbiter of veterans' law, short of the Supreme 
Court to which appeals still, of course, should be allowed. Moreover, 
to provide for greater finality and fewer remands to the BVA, I would 
change the Court's organic law to clarify the Court's power to review 
BVA benefit-of-the-doubt determinations. Where a fully developed 
evidentiary record clearly reflects entitlement to a benefit or clearly 
reflects a claimant's inability to succeed, the Court, in spite of 
otherwise remandable BVA error, should end the matter, either 
respectively, with an award of a benefit or an affirmance based on non- 
prejudicial error.
    The other possible approach to eliminating layers of judicial 
review would be to merge the Court into the Federal Circuit. The 
Federal Circuit's history itself reflects one of merger and spin-off. 
Such a merger would give the Federal Circuit a much bigger diet of 
veterans cases, thereby increasing its expertise. And it would provide 
for Article III decisionmaking, the very reason that the Federal 
Circuit was originally put into the process. Despite these 
considerations, it is my view, with 15 years of history behind the 
Court, that the preferable course of action would be to eliminate 
Federal Circuit review. First, I think it is preferable to have 
judicial review exclusively focused on veterans' cases. Second, even 
with an added focus on such cases, the Federal Circuit's primary focus 
will remain with intellectual property matters, the compelling reason 
for its own creation. At this juncture, I would think that few 
proponents still remain of the need for Article III review, short of 
the Supreme Court, of veterans cases. The Court's history shows that 
the threat of its being captured by its constituents has never 
materialized.
    Lastly, the model of Article I court review being the final stop 
before review to the Supreme Court has been in place for half a 
century. Indeed, appeals from the only other Article I appellate 
court--The U.S. Court of Appeals for the Armed Forces--are brought 
directly to the Supreme Court.
    Thank you for the opportunity to be heard. If I can be of further 
assistance in providing our veterans with the best justice system 
possible, I stand ready to help in any way that I can.

    Chairman Craig. Judge Kramer, thank you very much for that 
testimony.
    Now, let's turn to Cynthia Bascetta, Director, Education, 
Workforce, and Income Security, Government Accountability 
Office. Cynthia, please proceed.

STATEMENT OF CYNTHIA BASCETTA, DIRECTOR, EDUCATION, WORKFORCE, 
     AND INCOME SECURITY, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Bascetta. Thank you, Mr. Chairman, other Committee 
members. We appreciate the opportunity to be here today to 
share our views on VA's performance in processing compensation 
and pension claims.
    VA provided almost $30 billion in cash disability benefits 
to more than 3.4 million veterans and their survivors in fiscal 
year 2004. As you know, for years the claims process has been 
the subject of concern and numerous studies, mostly focused on 
persistently long waits for decisions, large backlogs, and 
inaccurate decisions.
    We believe these longstanding concerns, coupled with the 
need to modernize Federal disability programs, support GAO's 
decision to designate VA disability programs as a high risk 
area.
    My comments today draw from numerous GAO reports and 
testimonies on this topic. To update our work, we reviewed 
recent claims processing performance data, VA's fiscal year 
2006 budget justification and its 2004 performance and 
accountability report. After briefly addressing the current 
state of the disability claims process, I would like to focus 
on factors that we believe impede VA's ability to improve its 
performance.
    The bottom line, as we have all been discussing, is that VA 
continues to experience claims processing problems 
characterized by a large number of pending claims and lengthy 
processing times. VA did make considerable progress in reducing 
the size and age of its inventory through fiscal year 2003, but 
it has recently lost some ground.
    Pending claims for example, have increased from 254,000 at 
the end of fiscal year 2003, to 340,000 by the end of this 
March. This is about 50,000 cases more than their goal of 
290,000 cases for fiscal year 2005. More importantly, claims 
pending over 6 months, an indicator of a growing backlog, have 
increased more than 60 percent during the same period.
    VA has also reduced the average age of its pending claims 
from 182 days at the end of fiscal year 2001, to 111 at the end 
of fiscal year 2003. But the trend is slightly upward, to 119 
days at the end of this March. This is far from VA's strategic 
goal of 78 days by the end of fiscal year 2008.
    VA's reported performance on accuracy is better: 87 percent 
of claims were decided accurately in fiscal year 2004, close to 
its goal of 90 percent. But despite improvements in accuracy, 
consistency remains a significant problem.
    To ensure that similarly situated veterans who submit 
claims in different regional offices for similar conditions 
receive reasonably consistent decisions, we recommended in 
August 2002, and again in November 2004, that VA undertake 
systematic review of the consistency of its decisions. Just 
last Thursday, the IG published the first study of disparities 
in average payments between States, which was initiated by the 
Secretary following the adverse publicity at the end of last 
year.
    Our work also shows that program design and other aspects 
of the current system may constrain how much VBA can improve 
its performance, especially in the timeliness dimension. First, 
as you have heard, the law and court decisions, which have 
tended to protect veterans' rights and expand their entitlement 
to benefits, have at the same time adversely affected VBA's 
workload.
    For example, presumptive eligibility for certain benefits 
has increased the volume of claims, and certain court decisions 
have added administrative complexity to the decisionmaking 
process. In addition, veterans are filing claims at a growing 
rate, as Admiral Cooper testified. And VA reports that the 
number of disabilities per claims is also increasing, 
compounding the complexity of the decisions they need to make.
    Second, we reported that VBA will need to rely on 
productivity improvements to achieve its claims processing 
goals. VA assumes a 16 percent increase in rating related 
claims decided per FTE this year. However, based on available 
information, we believe it is unclear whether this is an 
achievable goal.
    Third, program design may limit performance improvements in 
both timeliness and consistency. For example, timeliness is 
affected by the overall size of the workload, which consists 
mainly of claims filed for increases in disability ratings. 
Most of these claims are for veterans who have less severe 
disabilities.
    We and others believe that consistency could be improved by 
consolidating regional offices. In fact, in 1995, VA listed 
more complete claims development and improved accuracy and 
consistency of decisions among the potential benefits of 
consolidation.
    To sum up, the system we have today has evolved over 
several decades. Like other Federal disability programs, VA 
needs to modernize, and faces persistent and perhaps 
intractable problems improving timeliness and consistency. 
Tackling these issues will be critical to assuring that VA's 
disability programs meet the needs of 21st century veterans.
    In addition, we believe that more fundamental reform, while 
a daunting task, presents an opportunity to achieve more than 
incremental gains in performance of VA's disability programs. 
That concludes my remarks.
    [The prepared statement of Ms. Bascetta follows:]
Prepared Statement of Cynthia Bascetta, Director, Education, Workforce, 
         and Income Security, Government Accountability Office
    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss claims processing issues 
in the Department of Veterans Affairs' (VA) disability compensation and 
pension programs. Through these programs, VA provided almost $30 
billion in cash disability benefits to more than 3.4 million veterans 
and their survivors in fiscal year 2004. For years, the claims process 
has been the subject of concern and attention within VA and by the 
Congress and veterans service organizations. Many of their concerns 
have focused on long waits for decisions, large claims backlogs, and 
inaccurate decisions. Our work and recent media reports of significant 
discrepancies in average disability payments from State to State has 
also highlighted concerns over the consistency of decisionmaking within 
VA. In January 2003, we designated modernizing Federal disability 
programs as a high-risk area, in part because of VA's continuing 
challenges to improving the timeliness and consistency of its 
disability decisions.
    You asked us to discuss the current state of VA's disability claims 
process and factors that may impede VA's ability to improve 
performance. My testimony today draws on numerous GAO reports and 
testimonies on VA's compensation and pension claims-processing 
operations. (See related GAO products.) To update our work, we reviewed 
recent claims processing performance data, VA's fiscal year 2006 budget 
justification, and VA's fiscal year 2004 Performance and Accountability 
Report. We did not perform independent verification of VA's data. We 
conducted our work in May 2005 in accordance with generally accepted 
government auditing standards.
    In summary, VA continues to have disability claims processing 
problems. For example, as of the end of March 2005, rating-related 
claims \1\ were pending an average of 119 days, 8 days more than at the 
end of fiscal year 2003, and far from its strategic goal of 78 days. 
During the same period, the rating-related inventory grew by about 
86,000 claims to a total of about 340,000 claims. While VA has improved 
the accuracy of its decisions to 87 percent in fiscal year 2004, it is 
still below its strategic goal of 96 percent in fiscal year 2008. 
Further, we have identified concerns about the consistency of decisions 
across VA's regional offices. VA has begun studying one indicator of 
inconsistency, the wide variations in average payments per veteran from 
State to State, in response to adverse media coverage.
    We identified factors that may impede VA's ability to improve its 
disability claims processing performance. The impacts of laws, court 
decisions, and the filing behavior of veterans can significantly affect 
VA's ability to decide claims, as well as the volume of claims 
received. Also, VA's ability to improve the productivity of its claims 
processing staff may affect its ability to improve performance. More 
dramatic gains in timeliness and inventory reduction might require 
fundamental changes in the design and operations of VA's disability 
programs.
                               background
    VA's disability compensation program pays monthly benefits to 
veterans with service-connected disabilities (injuries or diseases 
incurred or aggravated while on active military duty) according to the 
severity of the disability. Also, VA pays dependency and indemnity 
compensation to some deceased veterans' spouses, children, and parents 
and to survivors of service members who died on active duty. The 
pension program pays monthly benefits based on financial need to 
wartime veterans who have low incomes, served in a period of war, and 
are permanently and totally disabled for reasons not service-connected 
(or are aged 65 or older). VA also pays pensions to surviving spouses 
and unmarried children of deceased wartime veterans.
    When a veteran submits a claim to any of VA's 57 regional offices, 
a veterans' service representative (VSR) is responsible for obtaining 
the relevant evidence to evaluate the claim. Such evidence includes 
veterans' military service records, medical examinations and treatment 
records from VA medical facilities, and treatment records from private 
medical service providers. Once a claim is developed (i.e., has all the 
necessary evidence), a rating VSR, also called a rating specialist, 
evaluates the claim and determines whether the claimant is eligible for 
benefits. If the veteran is eligible for disability compensation, the 
rating specialist assigns a percentage rating based on degree of 
disability. Veterans with multiple service-connected disabilities 
receive a single composite rating. For veterans claiming pension 
eligibility, the regional office determines if the veteran served in a 
period of war, is permanently and totally disabled for reasons not 
service-connected (or is aged 65 or older), and meets the income 
thresholds for eligibility. A veteran who disagrees with the regional 
office's decision for either program can appeal sequentially to VA's 
Board of Veterans' Appeals (BVA), the U.S. Court of Appeals for 
Veterans' Claims, and the U.S. Court of Appeals for the Federal 
Circuit.
    In January 2003, we designated modernizing VA's disability 
programs, along with other Federal disability programs, as high-risk. 
We did so, in part, because VA still experiences lengthy processing 
times and lacks a clear understanding of the extent of possible 
decision inconsistencies. We also designated VA's disability programs 
as high-risk because our work over the past decade found that VA's 
disability programs are based on concepts from the past. VA's 
disability programs have not been updated to reflect the current state 
of science, medicine, technology, and labor market conditions.
    In November 2003, the Congress established the Veterans' Disability 
Benefits Commission to study the appropriateness of VA disability 
benefits, including disability criteria and benefit levels. The 
commission held its first public hearing in May 2005.
                 problems in claims processing continue
    VA continues to experience problems processing veterans' disability 
compensation and pension claims. These include large numbers of pending 
claims and lengthy processing times. While VA made progress in fiscal 
years 2002 and 2003 in reducing the size and age of its inventory of 
pending claims, it has lost some ground since the end of fiscal year 
2003. As shown in figure 1, pending claims increased by about one-third 
from the end of fiscal year 2003 to the end of March 2005, from about 
254,000 to about 340,000. During the same period, claims pending over 6 
months increased by about 61 percent from about 47,000 to about 75,000.

    Figure 1. Rating-Related Claims Pending at End of Period, Fiscal 
Year 2000 through March 2005
    Similarly, as shown in Figure 2, VA reduced the average age of its 
pending claims from 182 days at the end of fiscal year 2001 to 111 days 
at the end of fiscal year 2003. Since then, however, average days 
pending have increased to 119 days at the end of March 2005. This is 
also far from VA's strategic goal of an average of 78 days pending by 
the end of fiscal year 2008. Meanwhile, the time required to resolve 
appeals remains too long. While the average time to resolve an appeal 
dropped from 731 days in fiscal year 2002 to 529 days in fiscal year 
2004, close to its fiscal year 2004 goal of 520 days, but still far 
from VA's strategic goal of 365 days by fiscal year 2008.

    Figure 2. Average Days Pending for VA Compensation and Pension 
Rating-
Related Claims, Fiscal Year 2000 Through March 2005
    In addition to problems with timeliness of decisions, VA 
acknowledges that the accuracy of regional office decisions needs to be 
improved. While VA reports \2\ that it has improved the accuracy of 
decisions on rating related claims from 81 percent in fiscal year 2002 
to 87 percent in fiscal year 2004--close to its 2004 goal of 90 
percent. However, it is still below its strategic goal of 96 percent in 
fiscal year 2008.
    VA also faces continuing questions about its ability to ensure that 
veterans receive consistent decisions--that is, comparable decisions on 
benefit entitlement and rating percentage--regardless of the regional 
offices making the decisions. The issue of decisionmaking consistency 
across VA is not new. In a May 2000 testimony \3\ before the 
Subcommittee on Oversight and Investigations, Committee on Veterans' 
Affairs, House of Representatives, we underscored the conclusion made 
by the National Academy of Public Administration in 1997\4\ that VA 
needed to study the consistency of decisions made by different regional 
offices, identify the degree of subjectivity expected for various 
medical issues, and then set consistency standards for those issues. In 
August 2002, we drew attention to the fact that there are wide 
disparities in State-to-State average compensation payments per 
disabled veteran. We noted that such variation raises the question of 
whether similarly situated veterans who submit claims to different 
regional offices for similar conditions receive reasonably consistent 
decisions.\5\ We concluded that VA needed to systematically assess 
decisionmaking consistency to provide a foundation for identifying 
acceptable levels of variation and to reduce variations found to be 
unacceptable. Again, in November 2004, we highlighted the need for VA 
to develop plans for studying consistency issues.\6\ VA concurred in 
principle with our findings and recommendation in the August 2002 
report and agreed that consistency is an important goal and 
acknowledged that it has work to do to achieve it. However, VA was 
silent on how it would evaluate and measure consistency. Subsequently, 
VA concurred with our recommendation in the November 2004 report that 
it conduct systematic reviews for possible decision inconsistencies.
    In December 2004, the media drew attention to the wide variations 
in the average disability compensation payment per veteran in the 50 
States and published VA's own data showing that the average payments 
varied from a low of $6,710 in Ohio to a high of $10,851 in New Mexico. 
Reacting to these media reports, in December 2004, the Secretary 
instructed the Inspector General to determine why average payments per 
veteran vary widely from State to State.\7\ So, VA's Veterans Benefits 
Administration began another study in March 2005 of three disabilities 
believed to have potential for inconsistency: hearing loss, post-
traumatic stress disorder, and knee conditions. VA assigned 10 subject 
matter experts to review 1,750 regional office decisions. After 
completing its analysis of study data, VA plans to develop a schedule 
for future studies of specific ratable conditions and recommend a 
schedule for periodic follow-up studies of previously studied 
conditions.
        factors that may impede va's ability to improve claims 
                         processing performance
    Several factors may impede VA's ability to make, and sustain, 
significant improvements in its claims processing performance. These 
include the potential impacts of laws, court decisions, and the filing 
behavior of veterans; VA's ability to improve claims processing 
productivity; and program design and structure.
     laws, court decisions, and filing behavior of veterans impact 
                          workload performance
    Recent history has shown that VA's workload and performance is 
affected by several factors, including the impacts of laws and court 
decisions expanding veterans' benefit entitlement and clarifying VA's 
duty to assist veterans in the claims process, and the filing behavior 
of veterans. These factors have affected the number of claims VA 
received and decided. For example, court decisions in 1999 and 2003 
related to VA's duty to assist veterans in developing their benefit 
claims, as well as legislation in response to those decisions, 
significantly affected VA's ability to produce rating-related 
decisions. VA attributes some of the worsening of inventory level and 
pending timeliness since the end of fiscal year 2003 to a September 
2003 court decision that required over 62,000 claims to be deferred, 
many for 90 days or longer. Also, VA notes that legislation and VA 
regulations have expanded benefit entitlement and as a result added to 
the volume of claims. For example, presumptions of service-connected 
disabilities have been created in recent years for many Vietnam 
veterans and former Prisoners of War. Also, VA expects additional 
claims receipts based on the enactment of legislation allowing certain 
military retirees to receive both military retirement pay and VA 
disability compensation.
    In addition, the filing behavior of veterans impacts VA's ability 
to improve claims processing performance. VA continues to receive 
increasing numbers of rating-related claims, from about 586,000 in 
fiscal year 2000 to about 771,000 in fiscal year 2004. VA projects 3 
percent increases in claims received in fiscal years 2005 and 2006. VA 
notes that claims received are increasing in part because older 
veterans are filing disability claims for the first time. Also, 
according to VA, the complexity of claims, in terms of the numbers of 
disabilities claimed, is increasing. Because each disability needs to 
be evaluated, these claims can take longer to complete. VA plans to 
develop baseline data on average issues per claim by the end of 
calendar year 2005.
     ability to improve productivity may affect future performance 
                              improvements
    In November 2004, we reported that to achieve its claims processing 
performance goals in the face of increasing workloads and decreased 
staffing levels, VA would have to rely on productivity improvements.\8\ 
However, its fiscal year 2005 budget justification did not provide 
information on claims processing productivity or how much VA expected 
to improve productivity. VA's fiscal year 2006 budget justification 
provides information on actual and planned productivity, in terms of 
rating-related claims decided per direct full-time equivalent (FTE) 
employee, and identifies a number of initiatives that could improve 
claims processing performance. These initiatives include technology 
initiatives, such as Virtual VA, involving the creation of electronic 
claims folders; consolidation of the processing of Benefits Delivery at 
Discharge (BDD) claims at 2 regional offices; and collaboration with 
the Department of Defense (DOD) to improve VA's ability to obtain 
evidence, such as evidence of in-service stressors for veterans 
claiming service-connected Post-Traumatic Stress Disorder.
    It is still not clear whether VA will be able to achieve its 
planned improvements. VA's fiscal year 2006 budget justification 
assumes that it will increase the number of rating-related claims 
completed per FTE from 94 in fiscal year 2004 to 109 in fiscal year 
2005 and 2006, a 16-percent increase. For fiscal year 2005, this level 
of productivity translates into VA completing almost 826,000 rating-
related decisions. Midway through fiscal year 2005 VA had completed 
about 373,000 decisions.
  program design and regional office structure may limit performance 
                              improvements
    Program design features and the regional office structure may 
constrain the degree to which improvements can be made in performance. 
For example, in 1996, the Veterans' Claims Adjudication Commission \9\ 
noted that most disability compensation claims are repeat claims--such 
as claims for increased disability percentage--and most repeat claims 
were from veterans with less severe disabilities. According to VA, 
about 65 percent of veterans who began receiving disability 
compensation in fiscal year 2003 had disabilities rated 30 percent or 
less. The Commission questioned whether concentrating claims processing 
resources on these claims, rather than on claims by more severely 
disabled veterans, was consistent with program intent.
    In addition to program design, external studies of VA's disability 
claims process have identified the regional office structure as 
disadvantageous to efficient operation. Specifically, in its January 
1999 report, the Congressional Commission on Servicemembers and 
Veterans Transition Assistance\10\ found that some regional offices 
might be so small that their disproportionately large supervisory 
overhead unnecessarily consumes personnel resources. Similarly, in its 
1997 report, the National Academy of Public Administration found that 
VA could close a large number of regional offices and achieve 
significant savings in administrative overhead costs.
    Apart from the issue of closing regional offices, the Commission 
highlighted a need to consolidate disability claims processing into 
fewer locations. VA has consolidated its education assistance and 
housing loan guaranty programs into fewer than 10 locations, and the 
Commission encouraged VA to take similar action in the disability 
programs. In 1995 VA enumerated several potential benefits of such a 
consolidation. These included allowing VA to assign the most 
experienced and productive adjudication officers and directors to the 
consolidated offices; facilitating increased specialization and as-
needed expert consultation in deciding complex cases; improving the 
completeness of claims development, the accuracy and consistency of 
rating decisions, and the clarity of decision explanations; improving 
overall adjudication quality by increasing the pool of experience and 
expertise in critical technical areas; and facilitating consistency in 
decisionmaking through fewer consolidated claims-processing centers. VA 
has already consolidated some of its pension workload (specifically, 
income and eligibility verifications) at three regional offices. Also, 
VA has consolidated at its Philadelphia regional office dependency and 
indemnity compensation claims by survivors of servicemembers who died 
on active duty, including those who died during Operation Enduring 
Freedom and Operation Iraqi Freedom.
                        concluding observations
    VA has had persistent problems in providing timely, accurate, and 
consistent disability decisions to veterans and their families. To some 
extent, program design features that protect the rights of veterans 
have also increased the complexity of and length of time needed to 
process their claims. In addition, expanding entitlements have 
increased VA's workload as more veterans file claims. As a result, 
major improvements in disability claims processing performance may be 
difficult to achieve without more fundamental change. We have placed 
VA's disability programs on our high-risk list along with other Federal 
disability programs. Modernizing its programs would give VA the 
opportunity to address many longstanding problems. At the same time, VA 
could integrate any changes to disability criteria and benefit levels 
that the Veterans' Disability Benefits Commission may propose. This is 
important because significant changes in the benefits package and 
disability criteria are major factors affecting VA's disability claims 
process and its claims processing performance.
    Mr. Chairman, this concludes my remarks. I would be happy to answer 
any questions you or the Members of the Committee may have.

    Chairman Craig. Cynthia, thank you very much.
    Now, let's turn to Robert Chisholm, past President, 
National Organization of Veterans' Advocates.
    Robert.

    STATEMENT OF ROBERT CHISHOLM, PAST PRESIDENT, NATIONAL 
              ORGANIZATION OF VETERANS' ADVOCATES

    Mr. Chisholm. Thank you, Mr. Chairman and Members of the 
Committee, for the opportunity to present the views of the 
National Organization of Veterans' Advocates on the current 
state of VA claims adjudication and, more particularly, the 
appeals process.
    For the past 14 years, I have been representing claimants 
at all stages of the veterans benefits system that Chief Judge 
Kramer just outlined; from the initial stages, right through to 
appeals, to the Federal Circuit. My testimony is based on my 
experiences, and members of NOVA's experiences, in this 
process.
    On pages 2 and 3 of my written testimony, I outline the 
general appeals process, which has already been discussed here. 
On average, from start to finish, it takes about 3 years. 
Unfortunately, most of the claims I see take much longer than 
that. With the average age of a veteran now approaching 58 
years old, the problem is that many claimants do not survive 
the protracted adjudicatory process. Those claimants that do 
survive are fatigued and discouraged by interminable delays 
before the VA. If a claimant then appeals a final Board 
decision to the Court of Appeals for Veterans' Claims, it may 
easily take another 12 to 18 months.
    I would like to first discuss a number of problems that we 
see in the VA claims adjudication process, and then outline a 
couple of changes we would recommend.
    First, there are no real deadlines imposed on the VA to 
complete any steps in the adjudication of a claim. One famous 
decision reported that the claim had been contested for more 
than 7 years at that point. In another case, one of the 
colleagues of Judge Kramer stated at oral argument that a 14-
year delay is not unknown.
    The multi-step process to appeal a case is redundant and 
unnecessarily complicated, because it imposes upon a veteran a 
specific pleading requirement; namely, that the veteran must 
assert an additional affirmative intent to seek appellate 
review.
    There are, too many cases; not enough staff. According to 
the recent survey in the IG report of rating specialists and 
decision review officers, the so-called ``front line'' at the 
VA, 65 percent of them that answered stated that they had 
insufficient staff to ensure timely and quality service. The 
same survey reported that 57 percent believed it was too 
difficult to meet production standards if they adequately 
developed claims and thoroughly reviewed the evidence before 
issuing a ratings decision.
    The regional offices are not getting decisions right the 
first time, and this results in claimants filing appeals to the 
Board which are then remanded back to the regional office. Many 
of these claimants are stuck on a proverbial hamster wheel for 
years.
    In my experience, those people then appeal their cases to 
the court. And then the court, because of its limited 
jurisdiction, remands those claims, as well; adding another 
layer to that process.
    The Board of Veterans' Appeals causes delay in the 
adjudication of claims by failing to follow judicial precedent 
and forcing veterans to appeal their claims to the court; and 
by failing to handle claims expeditiously, as Congress intended 
when it enacted the Veterans' Benefits Act of 2003.
    The Appeals Management Center, in my opinion, has become a 
parking lot for both court and BVA remanded cases. As of 
October 2004, there were about 21,000 claims at the AMC, a 
number far in excess of what was originally planned for the 
AMC. As caseloads increase at the Appeals Management Center, 
longer delays are inevitable.
    NOVA's recommendations to alleviate some of these problems:
    No. 1, we believe Congress should impose mandatory 
timeframes for each step of the adjudication process. These 
time limitations should be subjected to some limited extension 
when the delay is clearly not caused on the part of the VA.
    No. 2, we believe that one appeal from a denial by the 
regional office should be all that is required that claimants 
file two documents to obtain appellate review. Right now, you 
need to file a notice of disagreement, and then a substantive 
appeal. The claimant should not be required to appeal the 
matter twice in order to bring the case before the Board.
    No. 3, even though the VA has not asked for increased 
staff, it seems that it is necessary, based upon the questions 
asked to the first panel and based upon what was testified to 
in the IG report.
    No. 4, NOVA believes that the Board of Veterans' Appeals 
should be replaced by independent administrative law judges, as 
in the Social Security system. Alternatively, Congress should 
consider decentralizing the Board of Veterans' Appeals, and 
placing the veterans law judges at the regional offices.
    And No. 5, this Committee should consider legislation 
permitting a veteran to hire an attorney earlier in the 
process. Presently, a veteran cannot retain counsel until after 
the Board of Veterans' Appeals issues the first final decision 
in a case. This is too late in the process for counsel to be 
truly effective because, by the time, the Board makes a 
decision on the claim, the record is effectively closed.
    As the VA Inspector General's report has shown, the initial 
adjudicators do not have enough time and staff to make timely 
and quality decisions. The same report noted that it is not 
possible for adjudicators to fully develop the claim and meet 
production deadlines.
    Attorneys would be helpful in obtaining, organizing, and 
presenting records on behalf of the veteran to make sure the VA 
processes the claim in a timely and accurate manner. An 
amendment to 38 U.S.C. Sec. 5904 is necessary.
    I would like to thank the Committee for this opportunity to 
present this testimony, and those conclude my remarks. Thank 
you.
    [The prepared statement of Mr. Chisholm follows:]
    Prepared Statement of Robert Chisholm, Past President, National 
                  Organization of Veterans' Advocates
    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to present the views of the National 
Organization of Veterans' Advocates (``NOVA'') on the current state of 
VA claims adjudication and the appeal process. NOVA is a not-for-profit 
educational organization created under 26 U.S.C. Sec. 501(c)(3) for 
attorneys and non-attorney practitioners who represent veterans, 
surviving spouses, and dependents before the Court of Appeals for 
Veterans' Claims (``CAVC'') and on remand before the Department of 
Veterans' Affairs (``VA''). NOVA has written many amicus briefs on 
behalf of claimants before the CAVC and the United States Court of 
Appeals for the Federal Circuit (``Federal Circuit''). The CAVC 
recognized NOVA's work on behalf of veterans when it awarded the Hart 
T. Mankin Distinguished Service Award to NOVA in 2000. The positions 
stated in this testimony have been approved by NOVA's board of 
directors and represent the shared experiences of NOVA's members.
    For the past 14 years I have been representing claimants at all 
stages of the veteran's benefits system from the VA regional office to 
the Board of Veterans' Appeals to the CAVC as well as before the 
Federal Circuit. My testimony, which has been approved by NOVA's board 
of directors, is based on my experiences during those 14 years, which 
have been shared by my colleagues in NOVA.
                   the appeals process before the va
    The VA appeals process begins with the filing of the ``notice of 
disagreement.'' A disappointed claimant has 1 year from the date of the 
unfavorable decision in which to file the ``notice of disagreement.'' 
The VA is then required to respond to the ``notice of disagreement'' 
with a new decision or with an explanation to the claimant in greater 
detail why the claim was denied. If the claimant remains dissatisfied 
with the response from the VA, the claimant is required to file a 
substantive appeal (in essence a second appeal letter) to bring the 
case before the Board of Veterans' Appeals. The Board can grant the 
claim, deny the claim or remand the claim back to the regional office 
if it determines the regional office erred in deciding the claim. It is 
not uncommon to see claims remanded from the Board back to the regional 
office multiple times before a final decision is made on the claim. The 
Chicago Tribune ran a story on May 16, 2005 illustrating how the 
repeated remand process harms veterans.\1\
    When the case is denied by the Board, the claimant has a 120-day 
window to appeal the case to the CAVC. It will ordinarily take another 
12 to 18 months for the CAVC to decide the appeal. When the Court acts 
in the claimant's favor, the result will most likely be a remand back 
to the Board of Veterans' Appeals. See Swiney v. Gober, 14 Vet. App. 65 
(2000) (wherein the CAVC acknowledged ``outright reversal on the merits 
has been very rare'' and remands are the norm). The remand from the 
CAVC provides the claimant with the opportunity to submit additional 
evidence and arguments in favor of the claim at issue, and it preserves 
the claimant's favorable effective date if there is an award of 
benefits. With the average age of a veteran now at 58 \2\, the problem 
is that many claimants do not survive the protracted adjudicatory 
process. Those claimants who do survive are fatigued and discouraged by 
interminable delays before the VA. The chart below shows average time 
periods for each stage of the administrative process (i.e., excluding 
time at court). \3\

------------------------------------------------------------------------
                                                        Average Elapsed
          Time Interval            Responsible Party   Processing  Time
                                                            (days)
------------------------------------------------------------------------
Initial Claim to Issuance of      Regional Office...  165 days
 Rating Decision.
Notice of Disagreement Receipt    Regional Office...  165 days
 to Statement of the case.
Statement of the case issuance    Veteran...........  48 days
 to Substantive Appeal receipt.
Substantive Appeal Receipt to     Regional Office...  521 days
 Certification of Appeal to
 Board of Veterans' Appeals.
Receipt of Certified Appeal to    Board of Veterans'  203 days
 Issuance of BVA decision.         Appeals.
                                 ---------------------------------------
    Total.......................    ................  * 1102 days (3.02
                                                       years)
------------------------------------------------------------------------
* 3.02 years.

    If a claimant appeals a Board decision to the Court of Appeals for 
Veterans Claims, it may easily take another 12 to 18 months for the 
Court to decide the appeal.
               problems in current va claims adjudication
    1. There are no deadlines imposed on the VA to complete any of the 
steps in the adjudication of a claim. One famous decision reported that 
the claim had been contested for more than 7 years at that point. 
Dambach v. Gober, 223 F.3d 1376, 1381 (Fed. Cir. 2000). One CAVC Judge 
commented during an oral argument that a 14-year delay is not unknown.
    2. The multi-step appeals process is redundant and unnecessarily 
complicated because it imposes upon the veteran a specific pleading 
requirement; i.e, the veteran must assert an additional affirmative 
intent to seek appellate review.
    3. Too many cases, not enough staff. According to a recent survey 
of rating specialists and decision review officers at the regional 
offices, 65 percent stated that they had insufficient staff to ``ensure 
timely and quality service.'' \4\ The same survey reported that 57 
percent believed ``it was too difficult to meet production standards if 
they adequately develop claims and thoroughly review the evidence 
before issuing rating decisions.'' \5\
    4. The regional offices are not getting the decisions right the 
first time and this results in claimants filing appeals to the Board 
which are then remanded back to the regional office. Many claimants are 
stuck on this proverbial hamster wheel\6\ for years.
    5. The Board of Veterans' Appeals causes delay in the adjudication 
of claims by: (1) failing to follow judicial precedent and forcing 
veterans to appeal their claims to Court, and (2) failing to handle 
claims expeditiously as Congress intended when it enacted the Veterans 
Benefits Act of 2003.
    6. The Appeals Management Center has become a ``parking lot'' for 
both Court and BVA remanded cases. As of October 2004, there were about 
21,000 claims at the AMC.\7\ As the caseload increases at the Appeals 
Management Center, longer delays are inevitable.
  nova's recommendations to alleviate problems in the va adjudication 
                               of claims
    1. Congress should impose mandatory timeframes for each step in the 
VA adjudication process. These time limitations should be subjected to 
limited extension when the delay is clearly not due to any inaction on 
the part of the VA.
    2. Have one appeal from a denial by the regional office and 
eliminate the requirement that the claimant file two documents to 
obtain appellate review, the ``notice of disagreement'' and the 
``substantive appeal.'' The claimant should not be required to appeal 
the matter twice in order to bring the case before the Board of 
Veterans' Appeals. This proposal would require an amendment to 38 
U.S.C. Sec. 7105.
    3. Even though the VA has not asked for it, an increase in staff is 
necessary at the regional office level. Specifically, NOVA believes 
that increasing the numbers of decision review officers at the regional 
offices would be helpful because they can clear cases and have the 
authority to review the case de novo at the regional office level. The 
use of decision review officers at the regional office level has been 
successful.
    4. NOVA believes that the Board of Veterans' Appeals should be 
replaced by independent Administrative Law Judges like those in the 
Social Security system. This would eliminate the delay inherent in the 
centralized Board. Alternatively, Congress should consider 
decentralizing the Board of Veterans' Appeals by placing the Board 
Members at the regional offices. Instead of having to transfer cases 
from the regional offices to the Board in Washington, the Board Member 
would be co-located at the regional office.
    5. This Committee should consider legislation permitting a veteran 
to hire and compensate an attorney earlier in the process. Presently, a 
veteran cannot retain counsel until after the Board of Veterans' 
Appeals issues the first final decision in the case. This is too late 
in the process for counsel to be truly effective because by the time 
the Board makes a decision on the claim, the record is effectively 
closed. As the VA Inspector General's Report has shown, the initial 
adjudicators do not have enough time and staff to make timely and 
quality decisions. The same report noted that it is not possible for 
the adjudicators to fully develop the claims and meet production 
deadlines. Attorneys would be helpful in obtaining, organizing and 
presenting records on behalf of the veteran and making sure that the VA 
processes the claim in a timely and accurate manner. An amendment to 38 
U.S.C. Sec. 5904 is necessary.
                               conclusion
    On behalf of NOVA, I would like to thank the Committee for the 
opportunity to present this testimony. Oversight of the VA adjudication 
process is critical and necessary to ensure that the VA fulfills the 
intent of Congress that it compensate veterans and their families for 
all benefits which can be supported in law. NOVA believes that the most 
effective means is to permit all claimants to hire an attorney from the 
beginning of the claims process. The current system merely reinforces 
the adjudicatory errors of the VA and compounds needless delay of these 
claims. NOVA submits that amendments to 38 U.S.C. Sec. Sec. 5904 and 
5905 to permit legal representation at the initial claim level are 
necessary.

    Chairman Craig. Robert, thank you very much.
    Rick, we will now hear from you, Rick Surratt, Deputy 
National Legislative Director, Disabled American Veterans. 
Welcome.

    STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Surratt. Good afternoon, Mr. Chairman and Members of 
the Committee. Today's hearing addresses one of the greatest 
challenges facing the Department of Veterans' Affairs: 
overcoming the persistent claims and appeals backlogs, to allow 
for more timely resolution of benefit claims.
    The numbers demonstrate the problem. Various studies have 
identified the causes. The causes dictate the solutions. But we 
either have not applied effective solutions, or have not 
applied solutions effectively.
    The consequences impact most negatively on veterans seeking 
relief from the economic effects of disability. Of the nearly 
502,000 compensation and pension claims pending as of May 21, 
2005, nearly 343,000 are the claims that require rating 
decisions. Of the rating cases, more than 71,000, or 20.9 
percent, have been pending for more than 6 months. The average 
time to process rating cases was 166 days in fiscal year 2004.
    Comparing this claims backlog to backlogs of the past few 
years, the numbers show there has been no maintained reduction 
in the pending workload. A maintained reduction does not appear 
likely over the long term, if the causes are not targeted more 
decisively and effectively with the appropriate solutions.
    The various studies have identified several factors that 
contribute to VA's problems and inability to overcome them. 
These factors are such things as management weaknesses, lack of 
accountability within VA, inadequate training, and 
inexperienced decision makers.
    Some of these factors are a consequence of, and others 
compound the root cause of the inefficiency, which are 
inadequate resources. The VA does not have adequate staff to 
train new employees, conduct quality reviews, and decide claims 
accurately and in a timely fashion.
    With ensuing backlogs, management's priority becomes the 
quantity of cases decided. With the emphasis on production, 
quality is compromised; requiring rework and adding to the 
appellate workload, which impacts adversely on VA field offices 
and the Board of Veterans' Appeals.
    To break this escalating cycle of increased inefficiency 
from higher error rates, more rework, additional demand on 
limited resources, and even greater focus on quantity at the 
expense of quality, VA must reorder its priorities.
    Quality must be the first priority, even if the backlogs 
become worse in the short term. But VA cannot achieve quality 
without adequate resources. If VA could begin to attack two 
principal deficiencies and break the cycle of failure with 
added resources, why doesn't it get them?
    The simple answer is: Because OMB dictates staffing 
requests as a political decision, for purposes of budget 
targets. And that too often becomes what VA gets, rather than 
the resources necessary to cover VA's real needs.
    I don't mean to suggest that added resources would be a 
panacea; just that they are an essential ingredient. VA 
management will have to take decisive steps to impose and 
enforce accountability for the positive reforms indispensable 
to reversing these stubborn and longstanding problems.
    Forming specialized rating teams, continually shifting 
resources to trouble spots, farming work out from overloaded 
stations, overtime, and other such stopgap measures only 
temporarily treat the symptoms. They do not cure the underlying 
disease. That will take serious reforms.
    Mr. Chairman, that concludes my testimony. I will be happy 
to answer any questions that the Committee may have.
    [The prepared statement of Mr. Surratt follows:]
    Prepared Statement of Rick Surratt, Deputy National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee:
    In response to your invitation to testify today, I am pleased to 
present the views of the Disabled American Veterans (DAV) and its 
Auxiliary on the functioning and performance of the claims and appeals 
processes of the United States Department of Veterans' Affairs (VA).
    Unlike any other group of beneficiaries seeking government 
assistance, our military veterans inherently and justly deserve special 
status, special benefits, and special treatment by and on behalf of the 
grateful citizens of the Nation whose interests they served to protect 
and preserve. We are beholden and duty bound to honor this national 
debt above all others. This principle resides at the very core of and 
is inseparable from our patriotic American values.
    Congress created VA to serve the interests of this special group of 
government beneficiaries in a manner consistent with our irrevocable 
indebtedness to them and our profound moral obligation to bestow upon 
veterans the benefits and services they so rightfully deserve 
consequent to and in return for their extraordinary sacrifices and 
contributions to our society. Because of this special status of the 
veteran as a claimant, VA has the objective of ensuring the veteran 
obtains benefits to which he or she is entitled. VA therefore has a 
higher responsibility to its claimants than the ordinary administrative 
agency. VA has the responsibility of being supportive and helpful to 
veterans in their efforts to obtain benefits, rather than leaving it to 
the veteran to prosecute his or her claim without guidance and without 
government aid.
    With this duty upon VA to assist the veteran in the full 
development and prosecution of his or her claim and with the obligation 
upon the government to ensure all avenues of entitlement are 
entertained and all pertinent legal authorities are considered, the 
proper outcome should be all but assured in a perfect world. However, a 
mass adjudication system as large and burdened as VA's that often 
involves judgments on complex questions, and sometimes conflicting 
evidence, is unavoidably imperfect. That is why one of the DAV's 
principal functions as a veterans' service organization is its program 
of assistance to veterans in benefits counseling and claims 
representation.
    For this purpose, the DAV employs a corps of 260 National Service 
Offers (NSOs) who are stationed principally in Veterans Benefits 
Administration (VBA) regional offices nationwide. From our fleet of 
Mobile Service Office vehicles, our NSOs also provide counseling and 
claims assistance in rural communities, intercity locations, disaster 
areas, Native American reservations, NASCAR races, conventions, and 
other various holiday and community events. To expand the availability 
of assistance, the DAV instituted a program of training and 
certification of State and chapter service officers. We certified 889 
service officers in 2003 and 1,078 service officers in 2004.
    For assistance to service members separating from active duty, the 
DAV employs 23 Transition Service Officers (TSOs). In conjunction with 
Transition Assistance Programs and Disabled Transition Assistance 
Programs, our TSOs provide benefits counseling and claims assistance at 
more than 80 military installations throughout the Nation.
    Our free services include representation before the Board of 
Veterans' Appeals (BVA) for our clients who elect to appeal unfavorable 
VA field office decisions. We employ attorneys and a non-attorney 
practitioner to provide representation to appellants before the United 
States Court of Appeals for Veterans' Claims (CAVC or the Court). Our 
attorneys also take appeals to the United States Court of Appeals for 
the Federal Circuit.
    From our involvement in benefits counseling and the claims and 
appellate processes at all levels, we are in a position to observe the 
strengths and weaknesses of the VA's system for administering the 
benefit programs, particularly the compensation and pension program. 
Benefits for disabled veterans and their dependents and survivors are 
at the core of the programs VA administers. The effective 
administration of these programs, including appellate review of claims 
decisions, is essential to the fulfillment of VA's momentous mission to 
care for our Nation's veterans.
    Historically, VA has struggled in this mission. Problems with 
claims processing, accurate decisions, and timely benefits delivery 
have plagued and challenged VA for several years. Many underlying 
causes acted in concert to bring about this now intractable problem. In 
the early 1990s, judicial review of BVA decisions began to expose 
arbitrary and unlawful practices. The Court of Veterans' Appeals, now 
CAVC, imposed requirements that VA decisions be better reasoned, better 
explained, and better supported by the record. In turn, BVA began to 
reverse and remand more field office decisions, requiring more rework. 
Military downsizing resulted in additional claims. Despite an 
increasing workload, annual appropriations provided for reduced 
staffing levels. VA also began to lose many of its experienced 
adjudicators to retirement, without sufficient remaining proficient 
adjudicators to both decide the pending claims and train new employees. 
These factors combined to increase pressure on adjudicators to increase 
production with an even further compromise of quality. More errors 
required more rework and resulted in more appeals, leading to even 
greater backlogs and declines in timeliness with a consequent vicious 
cycle of increasing inefficiency.
    These increasing problems in compensation and pension claims 
processing triggered various studies to identify the underlying 
problems and recommend remedial courses of action. In 1993, VA created 
its Blue Ribbon Panel on Claims Processing. In 1994, Congress 
established the Veterans' Claims Adjudication Commission to carry out a 
study of the claims adjudication system. In 1995, Congress commissioned 
a study by the National Academy of Public Administration (NAPA) of 
veterans' claims processing. In response to concerns about the quality 
of its service to claimants, VA created a Business Process 
Reengineering (BPR) Office in November 1995.
    The Blue Ribbon Panel on Claims Processing made more than 40 
proposals to improve efficiency in claims processing. These proposals 
included improved technology, redesigned work processes, and additional 
training.
    The Veterans' Claims Adjudication Commission transmitted its final 
report to Congress in December 1996. Unfortunately, the Commission's 
study was poorly focused and strayed away from its charge to evaluate 
the efficiency of the existing claims adjudication processes and 
procedures. The recommendations received little serious consideration.
    After conducting a study of the claims processing system, the BPR 
team issued its report in December 1996. The report called for 
comprehensive changes in the way VA processed compensation and pension 
claims. The report acknowledged that poor quality and the resulting 
necessity to rework claims were the primary problems accounting for 
overload on the system. The BPR team identified several core problems 
leading to poor quality. The team found that the segmented or 
compartmentalized claims process left no one accountable for quality in 
the final product. Because the claims and supporting evidence passed 
through multiple steps and many hands, errors often occurred. The team 
found that management placed the emphasis on production and timeliness 
standards, or ``making the numbers,'' instead of producing quality 
decisions. This lack of emphasis on quality resulted in high error 
rates, inconsistent decisions, and the appearance of arbitrariness in 
VA's decisions, which led to a relatively high number of appeals and 
necessitated more rework of claims.
    The recommended plan adopted process changes designed to remove the 
conditions responsible for errors and inefficiency. Quality--and thus 
efficiency--and improved service to claimants were to be the primary 
goals, supported by training and a certification process for 
adjudicators, along with better quality review and accountability 
mechanisms. Implementation plans were compiled in a report issued in 
June 1997, and the BPR plan was incorporated in the Compensation and 
Pension Service's (C&P's) business plan and later in VA's first 5-year 
strategic plan under the Government Performance and Results Act (GPRA), 
submitted to Congress in September 1997.
    In its strategic plan, VA indicated that it planned to attack 
quality problems in its products by ``doing it right the first time.'' 
However, if a mistake did occur, it would be candidly acknowledged and 
corrected as a priority. VA would assess and improve the level of 
accuracy for all work and correct errors in the shortest possible time 
as appropriate for each business line. Some of VA's performance goals 
were to make correct decisions 97 percent of the time; decrease the BVA 
remand rate from 43.7 percent to 20 percent; and improve the quality of 
disability examinations so that 99 percent were sufficient to 
adjudicate claims. The DAV and other veterans' service organizations 
strongly supported the BPR initiative.
    From its comprehensive study of VBA's operations, NAPA issued its 
report to Congress in August 1997. NAPA was critical of VBA's past and 
planned staff reductions. NAPA noted that no sound basis existed for VA 
to conclude fewer employees would be able to handle the future 
workload. The NAPA study also concluded that VBA's most fundamental 
need was to develop the leadership and organizational capacities 
necessary to enable it to plan and manage its functions strategically.
    NAPA found that VBA management had a history of operating in a 
reactive rather than a proactive mode. NAPA observed that VBA focused 
principally on short-term issues, without any comprehensive, effective 
long-term strategy to solve its problems and permanently improve 
program performance and service delivery. NAPA saw a repetitive pattern 
in which VBA was good at generating plans but not good at carrying them 
out. According to NAPA, VBA's efforts to develop comprehensive 
performance improvements had failed because of a lack of precision 
planning and the discipline required to push a generalized vision 
through to operational reality. During the implementation process, 
systematic oversight, tracking, and coordination had been inadequate. 
No systematic cycle had existed for review of effectiveness of the 
results of implementation. No management action was taken to keep the 
organization focused on achieving its goals.
    Additionally, because lines of accountability were not clear, VBA 
leaders were not held firmly accountable for high levels of 
performance. NAPA noted that VBA's operational control is 
decentralized, with power residing in the area and regional office 
directors. NAPA found that a sense of powerlessness to take action 
permeated VBA. In turn, field personnel perceived VBA's Central Office 
staff as incapable of taking firm action. NAPA said that a number of 
executives interviewed by its study team indicated VBA management 
officials have difficulty giving each other bad news or disciplining 
one another. NAPA concluded that, until VBA is willing to deal with 
this conflict and modify its decentralized management style, it will 
not be able to effectively analyze the variations in performance and 
operations existing among its regional offices. Neither would it be 
able to achieve a more uniform level of performance. Regarding C&P 
service especially, NAPA concluded that the C&P director's lack of 
influence or authority over the field office employees would greatly 
hamper any efforts to implement reforms and real accountability. NAPA 
recommended that the Under Secretary for Benefits strengthen C&P 
influence over field operations and close the gaps in accountability.
    NAPA observed that accountability is the key. A no-nonsense 
approach to accountability disciplines the strategic management cycle. 
Top leaders must establish clear, unequivocal accountability for 
performance and provide full support to executives and organizations 
charged with accomplishing goals. However, leaders must be willing to 
discipline those who are not succeeding, according to NAPA.
    NAPA acknowledged some steps in the right direction, such as 
efforts to implement GPRA methods and the BPR plan. The real question, 
according to NAPA, was whether VBA could implement these initiatives 
successfully.
    In May 2001, VA Secretary Anthony Principi created the VA Claims 
Processing Task Force to identify and recommend to the Secretary steps 
that VA could take to increase productivity, reduce processing times, 
and shrink the disability claims backlog without compromising the 
accuracy of decisions or service to veterans. Acknowledging the several 
prior studies and efforts to implement their recommendations, the Task 
Force observed that VBA had developed many initiatives in the belief 
that they would produce a better capability to adjudicate claims. 
Regarding these efforts, the Task Force concluded:
    While some of VBA actions have been important first steps, the Task 
Force believes that VBA Central Office decisions regarding choices 
about how to improve the processing of claims has exacerbated the 
claims backlog crises. VBA has also created many problems through poor 
or incomplete planning and uneven execution of claims processing 
improvement projects. VBA Central Office choices have essentially 
served to reduce the availability of skilled labor for processing 
claims, while diverting experienced staff to implement unproven process 
changes that were poorly planned or managed. . . .
    VA Claims Processing Task Force, Report to the Secretary of 
Veterans Affairs, iii (Oct. 2001). The Task Force summarized the 
essence of its own findings: ``The basic overarching theme of the Task 
Force findings is that flaws exist in Accountability, Communications, 
and Change Management.'' Task Force Report, at iii.
    The Task Force's specific findings echoed many of the same 
deficiencies and challenges identified in the previous studies of the 
compensation and pension claims processing system. For example, the 
Task Force acknowledged the fundamental flaw in the system in which 
rework overloads the system: ``The current C&P sequential workflow was 
not designed to deal efficiently with rework reintroduced into the 
process. Rework includes such items as remands, cases under special 
review, and pending cases that have aged for some reason, requiring 
that they be introduced back into the workflow more than once over a 
period of time.'' Task Force Report, at 28. The Task Force also 
acknowledged the detrimental effect of appeals upon the system. Beyond 
the added workload, the Task Force noted the unfairness to claimants 
from delays due to appeals: ``Currently, both the time delays to handle 
appeals and the time to correct remanded decisions are both 
unreasonable and unfair to veterans awaiting decisions.'' Task Force 
Report, at 14.
    The Task Force identified several systemic deficiencies 
contributing these core problems. Like NAPA, the Task Force observed 
that VBA improvidently reduced its staffing:
    The effective management of paper documents is a critical success 
factor in C&P efforts to process claims in a timely manner. However, 
VBA reduced the size of its Regional Office administrative workforce 
based on unrealistic assumptions about the benefits of case management 
and information technology. As a result, VBA Regional Offices are not 
staffed with the number and types of personnel with the skills 
necessary to plan and manage a complex administrative support process. 
Task Force Report, at 49.
    The Task Force found that limited staffing for claims adjudication 
also poses a difficult problem. Referring to the dilemma of investing 
employee time in training and implementing process reforms versus the 
crisis of completing the existing workload, the Commission 
characterized the challenge facing VA as follows:
    With increasing workload, VBA Regional Offices face the practical 
problem of having to allocate a fixed level of direct labor hours to 
accomplishing an increasing volume and complexity of work. . . . 
Additionally, VBA's workforce is faced with the challenge of having to 
allocate direct labor hours to non-claim tasks, such as the planning 
and implementation of training and modernization initiatives. Task 
Force Report, at 3.
    In this regard, the Task Force stated further: ``VBA took trainers 
from the service centers to conduct training. This has naturally 
reduced productivity significantly. . . . VBA must develop a strategy 
to bring on new employees in a manner that allows for timely and 
effective training of new employees with minimum impact on the 
performance of Regional Offices.'' Task Force Report, at 78. ``Training 
new C&P employees pulls experienced staff out of the direct claims 
processing system, which leads to increased time to process claims.'' 
Task Force Report, at 82.
    The Task Force also noted the threat to the viability of VA's aging 
data system, the Benefits Delivery Network (BDN), as a consequence of 
reduced resources and limited staffing:
    BDN operations and support are approaching a crisis stage with the 
potential for BDN operational performance to degrade and eventually 
cease. This situation has occurred because of documented VBA Central 
Office policy decisions that limited the funding of BDN upgrades, 
reduced the size of the Hines ITC workforce, and stopped new hiring for 
the past 5 years. Task Force Report, at 61.
    In addition to the need for a solution to the problem of dedicating 
staff to the chore of training new employees, the Task Force pointed to 
the need for more effective training: ``VBA appears to have no apparent 
fully integrated training plan and program. The VBA Office of 
Employment Development and Training appears to be neither encouraged, 
nor equipped, to develop a comprehensive plan. . . . VBA has not put 
together a sorely needed training infrastructure.'' Task Force Report, 
at 24. The Task Force summarized some of the defects in adjudicator 
training:
    The training program was not geared to grade levels or competencies 
at each grade level in a job series. Employees were not certified as 
having the skills needed to do their jobs. Many of the instructors were 
not certified. In addition, VBA did not have mandatory training hours 
for all employees. This creates a gap for employees at the journeyman 
levels, as training programs are not required. No effort was made to 
link the learning activities to increased performance. Some measure is 
needed to verify the content of educational programs is achieving the 
learning objectives of the organization. Task Force Report, at 79.
    Lack of accountability also figured prominently in the defects the 
Task Force found: ``there is little evidence of accountability for 
decisions and operations.'' Task Force Report, at 50. ``This single 
attribute--accountability--is the most serious deficiency in the VBA 
organization.'' Task Force Report, at 17. The Task Force described the 
nature and intended effect of real accountability:
    The term accountability includes not only the proposition that a 
leader is responsible for the actions of the group but also is 
accountable for the results of those actions or inactions. 
Accountability also assumes that systems are in place to both measure 
results and to require positive actions when the objective is not 
achieved or when adjustments must be made. It is important to establish 
direction, to expect that action will be taken, and to provide the 
tools necessary to execute the action. Task Force Report, at 16.
    In addition to a general lack of accountability, the Task Force 
attributed much of the inability to enforce accountability to a weak 
management structure. Pertinent comments were as follows:
    [T]he VBA Office of Field Operations (OFO) is not organized 
properly to function in a leadership role. . . . Not only do the 
incumbents have an exceptionally large span of control which cannot be 
exercised effectively but also the obvious friction that seems to exist 
between the OFO offices and the Central Program Offices (especially 
C&P) which is debilitating to both headquarters and Regional Office 
organizations. Task Force Report, at 17.
    C&P directives are specifically undermined by tepid support or no 
support from members of the OFO organization. Task Force Report, at 18.
    At present, two Deputy Assistant Under Secretaries (Office of Field 
Operations) directly oversee the 57 Regional Offices. The fact seems to 
be that oversight is neither effective nor really expected. Task Force 
Report, at 70-71.
    VBA's Central Office leadership gives the impression of neither 
demanding adherence to nor of being completely aware of the actual 
compliance to directives at the individual Regional Office level. . . . 
If there is no base structure, there cannot be reliable measurement or 
any reasonable assurance that claims decisions will be made as 
uniformly and fairly as possible to the benefit of the veteran. Task 
Force Report, at 16.
    With this lack of accountability, the Task Force found a lack of 
enforcement of program directives and policies: ``Inconsistent and 
inadequate implementation of VBA Central Office directives at Regional 
Offices was prevalent. Not only did interpretations differ as to their 
meaning, but also many at the working level frequently seemed unaware 
of the existence of certain policy changes or did not realize the 
importance of the information when it was received.'' Task Force 
Report, at 18. ``It is apparent to the Task Force that there is wide 
variance in implementing instructions and directives, as well as IT 
programs, at the Regional Office level, which has led to confusion and 
lack of uniform adherence to accepted procedures.'' Task Force Report, 
at 71.
    The Task Force found that management weaknesses were an underlying 
cause of the poor lines of communication: ``As an example of the need 
for clear lines of communication and control, VBA has no effective 
method of direct oversight to ensure consistent implementation of 
directives.'' Task Force Report, at 71.
    Similarly, there was a failure to manage change for the purpose of 
bringing about the reforms necessary to overcome the persisting claims 
processing problems:
    Much of the problem of transforming the current claims processing 
system into an efficient system rests on an inadequate management plan; 
implementation that too often has been undisciplined and incoherent; 
and a failure to establish priorities and achievable completion dates. 
Additionally, there were insufficient requirements for feedback 
reporting and accountability by Regional Office managers to the Under 
Secretary and senior VBA managers. The variability within the system 
and among the Regional Offices indicates a lack of follow-through at 
VBA Central Office. Task Force members frequently found programs that 
had not been implemented fully or according to schedule and, at times, 
not implemented at all. Task Force Report, at 55.
    The Task Force noted NAPA's identification of this lack of 
accountability and recommended solution: ``It should be noted that the 
NAPA recommendation (4NAPA-5) stated that the Under Secretary for 
Benefits should develop a formal organizational chart for VBA and its 
components that closes the gaps in accountability between the Regional 
Offices and VBA Central Office.'' Task Force Report, at 71.
    From these findings, the Task Force made several recommendations to 
correct the problems. Some were stopgap measures, such as specialized 
adjudication teams, to reduce backlogs of older cases, and others 
involved permanent reforms. Some were to be done as soon as possible, 
and others were to be implemented over time. The Task Force warned that 
failure to address the fundamental flaws in the system involving 
accountability, communications, and change management, ``will ensure 
that VBA continues to be perceived as a reactive, short-term focused, 
uncoordinated entity.'' Task Force Report, at iii.
    In the DAV's view, many of these recommendations appropriately 
targeted and addressed administrative deficiencies contributing to the 
overall problem. On the other hand, some recommendations were 
shortsighted in our view. For example, greater resources were to be 
allocated to higher performing regional offices only. Conversely, 
poorer performing offices would generally receive no increases in 
staffing or other resources to aid in improvement. To us, that 
represented continued acceptance of management failures. Instead of 
assisting in and insisting on improvement in performance, VBA would 
simply punish the poorer performing regional offices with fewer 
resources. In addition to acceptance of management inability to induce 
change, this would seem to exacerbate poor performance and put 
improvement beyond the ability of underachieving regional offices. 
Moreover, it would punish veterans under the jurisdiction of the less 
proficient offices.
    In any event, the Task Force was calling upon an entrenched 
bureaucracy to change its ways, and, while many of the recommendations 
were beneficial, they did not focus enough on correcting the primary, 
or root, causes of claims backlogs in our view. Although the Task Force 
recommended improvements in training, recommended the imposition of 
means to measure and enforce individual accountability, and recommended 
a stronger management structure, the necessary improvements in quality 
and timeliness have not been forthcoming. We believe VBA still has not 
taken the steps necessary to ensure adjudicators ``get it right the 
first time.''
    VA has been unable or unwilling to break the cycle in which 
production pressures drive a short-term quest for production that 
compromises quality for quantity and, over the long term, proves 
counterproductive. In The Independent Budget (IB) for fiscal year 2005 
at pages 28-29, we observed that emphasis on production targets with a 
corresponding compromise in quality had apparently begun to cause anew 
a decline in timeliness as we had warned in the IB for the previous 
year. These persisting problems have prevented disabled veterans from 
receiving, within a reasonable time, the financial assistance they 
often urgently need to relieve the economic effects of disability. We 
also emphasized that VA cannot overcome these problems without adequate 
resources.
    As of May 14, 2005, there were 506,105 compensation and pension 
claims pending. Of these, 345,237 were claims requiring disability 
rating actions, with 72,701 of the rating cases, or 21.1 percent, in a 
pending status for more than 180 days. This number of currently pending 
rating cases represents a substantial increase above the 253,597 cases 
pending at the end of fiscal year (FY) 2003 and the 321,458 cases 
pending at the end of fiscal year 2004. In its fiscal year 2006 Budget 
Submission, VA projected that it would reduce the number of rating 
claims pending at the end of fiscal year 2005 to 282,876. With this 
backlog increasing and a little more than one-third of the fiscal year 
remaining, it appears VA will finish the year with a loss of ground 
rather than a gain against the backlog.
    According to the ``Budget Highlights'' in the President's Budget 
Submission, one of VA's highest priorities is to ``[i]mprove the 
timeliness and accuracy of claims processing.'' The Budget Submission 
states: ``Funds are included in the Veterans' Benefits Administration 
to sustain progress made under the Secretary's priority of improving 
timeliness and accuracy of claims.'' In another statement, the Budget 
Submission declares: ``As a Presidential initiative, improving the 
timeliness and accuracy of claims processing remains the Department's 
top priority associated with our benefit programs.'' However, it 
appears that this budget abandons efforts to improve on the intolerable 
situation in which VA has large backlogs of pending claims and in which 
benefits awards to veterans are delayed as a consequence. The Budget 
Submission for fiscal year 2004, for example, set a goal of reducing 
the average processing time for compensation and pension claims from a 
projected 165 days in fiscal year 2003 to 100 days in fiscal year 2004, 
with a strategic target of 90 days. The Budget Submission for fiscal 
year 2005 set a goal of reducing the average processing time for 
compensation and pension claims from a projected 145 days in fiscal 
year 2004 to 100 days in fiscal year 2005, with a strategic target of 
90 days. The fiscal year 2006 Budget Submission revises these figures 
to show that average was actually 166 days in fiscal year 2004, that 
the time will be reduced to 145 days in fiscal year 2005, and that the 
goal for fiscal year 2006 is also 145 days. The strategic target has 
been increased from 90 days to 125 days. This demonstrates that the 
resources requested are insufficient to meet a goal that VA portrays as 
a ``top priority.'' These figures call into question the genuineness of 
this stated goal.
    Adequate resources are a key element of an efficient and effective 
benefits delivery system. Adequate resources permit VA to perform 
training to bring the proficiency of adjudicators up to acceptable 
levels. Undeniably, veterans' benefits law and the medical questions 
involved in disability decisions are often complex; inescapably, 
adjudicators must be well trained. Effective training requires 
resources, that is, knowledgeable and experienced instructors who have 
the necessary time to devote to instruction and who utilize uniform 
lesson plans and available technology. In turn, well-trained 
adjudicators must have adequate time to thoroughly review evidence and 
make well-researched and well-reasoned decisions. With the unavoidable 
variations in proficiency, competent quality reviewers must review a 
sample of the decisions of each adjudicator and overseers must impose 
remedial measures where quality reviews demonstrate deficiencies, if 
the system is ever to be efficient. Management, from the regional 
office level to the top, must constantly monitor performance and 
enforce accountability. Though there always must be a reasonable 
balance between time allowed for decisionmaking and the necessity to 
stay abreast of the workload, quality cannot take a backseat to the 
blind pursuit of production quotas. As obvious as these realities are, 
VBA seems to set them aside in its reactive mode of management where 
field offices are directed to reduce backlogs at all cost.
    To complement its Systematic Technical Accuracy Review (STAR) 
program, which measures quality at the national level, VA announced in 
the year 2000 a new initiative for quality review at the individual 
level. Acknowledging that management needed a tool to consistently 
monitor individual performance, VA created the ``Systematic Individual 
Performance Assessment'' (SIPA) program. Under this program, VA would 
review an annual sample of 100 decisions for each adjudicator to 
identify individual deficiencies, ensure maintenance of skills, promote 
accuracy and consistency of claims adjudication, and restore 
credibility to the system. The reviewers would perform related 
administrative functions, such as providing feedback on reviews, 
maintaining reports, and playing a role in employee development and 
ongoing training. Unfortunately, VA abandoned this initiative during 
2002, and proficiency is now apparently subjectively assessed by 
supervisors based on their day-to-day perceptions of employee 
performance. Without any actual systematic review of samples of an 
individual adjudicator's decisions, deficiencies are more likely to go 
undetected and unremedied. Here again, we must question whether the 
culprit behind abandonment of SIPA was inadequate resources.
    The VA Claims Processing Task Force addressed inadequacies in 
adjudicator training in substantial detail. Task Force Report, at 77-
81. From its findings, the Task Force recommended centralization and 
integration of VBA training. This recommendation included a 
comprehensive list of specific measures to improve the content and 
delivery of training. Our understanding is that many of these measures 
have not been implemented, that VA has no structured or ongoing 
training for journeyman adjudicators, and that no procedure exists to 
target training to deficiencies demonstrated by STAR reviews. 
Therefore, we believe the Committee may wish to specifically query VA 
about its training program, with specific reference to the details of 
the Task Force recommendation.
    Again, the lack of a methodical and ongoing assessment of 
individual proficiency, the lack of a structured and uniform national 
program of training for journeyman adjudicators, and the lack of any 
feedback connection between training and STAR assessments can be 
expected to lead to and tolerate poor quality and a lack of national 
uniformity in claims decisions. Recent print media articles by 
investigative reporters using VA-generated data exposed geographical 
variations in the average compensation levels of veterans.
    This media attention prompted VA to have its Inspector General (IG) 
investigate the claims adjudication system. The IG's office found that 
demographic factors accounted for some of the variance. Differences 
between claims processing characteristics of the States studied 
generally did not reveal correlations to variances. However, the 
inconsistency between States was significant for veterans rated 100 
percent for post-traumatic stress disorder, for example. The IG report 
attributed this to the subjectivity of the rating criteria. Sixty-five 
percent of the adjudicators who responded to a survey by the IG's 
office reported insufficient staff to ensure timely and quality 
service. Fifty-seven percent of the adjudicators responded that is was 
difficult to meet production standards if they took the time to 
adequately develop claims and thoroughly review the evidence before 
deciding the claim.
    To aid us in providing the Committee information for this oversight 
hearing, we asked the supervisors of our national service offices to 
provide assessments of the strengths and weaknesses of their VA 
regional offices. Rather than have them respond to a list of issues 
compiled by our headquarters staff, we allowed them to report based on 
their individual perceptions and views of the most notable or prominent 
factors responsible for the performance of their regional offices.
    Among the favorable comments, the experience, competency, 
attitudes, and decisionmaking of decision review officers (DROs) were 
the most frequently mentioned. Many of our supervisors also reported 
good cooperation between veterans' service organizations and regional 
office management, although there were also several who reported less 
cooperative relationships and open communication.
    The number of comments about inadequate VA staffing by far exceeded 
all others, favorable and unfavorable. About two-thirds of our 
supervisors pointed specifically to overworked VA employees as a 
serious problem responsible for poor performance. Associated with this 
inadequate adjudication staff were frequent comments that management 
pushed for production over quality and that there were timeliness 
problems in developing and deciding claims, as well as authorizing 
awards, and completing actions on appeals and remands. Several offices 
reported that VA managers diverted DROs from their regular duties to 
work these older claims and constantly required employees to 
concentrate on reducing the backlogs of certain types of claims that 
had been neglected or allowed to remain pending for the longest periods 
of time. The second most frequently mentioned problem was inexperienced 
and inadequately trained adjudicators due to a high rate of employee 
turnover, complicated by insufficient staff or time for training. Many 
of our supervisors reported low morale among VA employees consequent to 
the burdens and problems stemming from understaffing. Poor quality in 
VA disability examinations was mentioned by some of the supervisors. A 
frequently occurring criticism was the observation that, contrary to 
law, VA adjudicators insist on ordering VA examinations where treatment 
records provide all the medical findings necessary for a decision. 
Another recurring comment was that adjudicators do not actually consult 
the laws, regulations, and other legal authorities to make decisions, 
but rather rely almost totally on standard formats in the computer-
assisted rating tool, Rating Board Automation 2000, to make decisions, 
thereby omitting consideration of pertinent laws and regulations in 
some instances.
    Appellate workloads and dispositions provide insight into the 
quality of VA regional office claims decisions. In our testimony here, 
we focus on compensation and pension claims processing inasmuch as that 
is where the challenges are the greatest and the problems persist. 
Approximately 95 percent of BVA's workload involves disability 
compensation and pension claims. Because appellate review is so 
essential to ensuring justice in an unavoidably imperfect adjudication 
system, the proper functioning of appellate processes is of major 
importance, especially where the rights and benefits of our veterans 
are involved.
    As a statutory board, BVA was created in recognition of the 
importance of an effective appellate body within the VA administrative 
process and after experiments with other variations of appellate review 
had proven unsatisfactory. By consolidating and centralizing the 
appellate board in Washington, DC., under the authority of the agency 
head, then the Administrator of VA, the problems of decentralization, 
lack of uniformity, and the lack of finality were addressed through a 
clearer sense of direction. By Executive Order issued July 28, 1933, 
promulgated as Veterans Regulation No. 2(a), President Franklin D. 
Roosevelt established BVA. That Executive Order later became law 
through operation of a special statutory provision. By Veterans 
Regulation No. 2(a), the President mandated that BVA would sit at VA's 
Central Office, be directly under the Administrator, provide one review 
on appeal to the Administrator, afford ``every opportunity'' for a 
``full and free consideration and determination,'' provide ``every 
possible assistance'' to appellants, have final authority, and take 
final action that would be ``fair to the veteran as well as the 
Government.'' Since its inception, BVA has operated separate and 
independent from the other elements of VA. While there have been some 
changes in its configuration since 1933, BVA has retained its basic 
concept and mission.
    As it exists today, BVA's mission is still to make the final 
decision on behalf of the VA Secretary in claims for benefits. Section 
7104 of title 38, United States Code, provides: ``All questions in a 
matter which . . . is subject to a decision by the Secretary shall be 
subject to one review on appeal to the Secretary. Final decisions on 
such appeals shall be made by the Board.'' The Board operates under 
various statutory provisions codified at chapter 71 of title 38, United 
States Code, as well as regulations in part 19 and rules of practice in 
part 20 of title 38, Code of Federal Regulations.
    Although BVA generally makes the final decision in an appeal, the 
appellate process begins with the VA field office that made the 
decision appealed, referred to as the agency of original jurisdiction, 
and, in some instances, action by the agency of original jurisdiction 
in an appealed case alleviates the need for a final decision by BVA. An 
appeal may be favorably resolved by the agency of original jurisdiction 
before the case is transferred to BVA or after the case has been sent 
back, ``remanded,'' to the agency of original jurisdiction to cure some 
procedural omission or record defect. Up to 50 percent of the appealed 
cases are resolved by the agencies of original jurisdiction and never 
reach the Board. About 75 percent of the remanded cases are returned to 
the Board for a final decision, however.
    A veteran or other claimant initiates an appeal by filing a 
``notice of disagreement'' with the agency of original jurisdiction. 
The agency of original jurisdiction may then take such additional 
development or review action as it deems proper. If such action does 
not resolve the disagreement, the agency of original jurisdiction 
issues to the appellant a ``statement of the case'' that contains a 
summary of the pertinent evidence, a citation of the pertinent legal 
authorities along with an explanation of their effect, and an 
explanation of the reasons for the decision on each issue. To complete, 
or ``perfect,'' the appeal, the appellant must then file with the 
agency of original jurisdiction a ``substantive appeal,'' a written 
statement specifying the benefit or benefits sought and the bases of 
the appellant's belief that he or she is legally entitled to the 
benefit or benefits. Upon receipt of the substantive appeal, VA enters 
the case on the BVA docket. The BVA docket is a list of cases perfected 
for appellate review compiled by the chronological order in which the 
substantive appeal was received. The Board receives these cases for 
review by their order on the docket, although a case may be advanced on 
the docket for demonstrated hardship or other good cause. The Board 
must afford each appellant an opportunity for a hearing before deciding 
his or her appeal. The hearing may be held before the BVA at its 
principal office or at a VA facility located within the area served by 
appellant's VA regional office. The Board may enter a decision that 
orders the granting of appropriate relief, denying relief, or remanding 
the appeal for further action by the agency of original jurisdiction.
    The Board may reconsider its decision upon an order by its chairman 
on the chairman's initiative or upon a motion by the claimant, and the 
Board may correct an obvious error in the record without regard to an 
order for reconsideration. The Board is also empowered to revise its 
decision on grounds of clear and unmistakable error. The Board may 
undertake review on grounds of clear and unmistakable error on the 
Board's own initiative or at the request of the claimant.
    Claimants for veterans' benefits who believe BVA made factual or 
legal errors in deciding their claims may appeal to CAVC. The Court may 
affirm or reverse the BVA decision, or remand for further action. The 
landmark legislation enacted in 1988 that subjected BVA decisions to 
the scrutiny of an independent court has necessitated positive reforms 
in BVA decisionmaking. Because the Board's decisions must be justified 
with an explanation of the factual findings and legal conclusions and 
because VA must defend its decisions in court, denials that go against 
the weight of the evidence or law have declined. The Board allows and 
remands substantially higher percentages of appeals than it did before 
judicial review.
    During 2004, 2,234 claimants appealed to CAVC. The Court decided 
1,780 cases, with an average processing time from filing of the appeal 
to disposition of 392 days. Of that total, 1,087 cases, or 61 percent, 
were either reversed/vacated and remanded or remanded because of some 
substantive error or procedural defect. This reflects a high error rate 
among those BVA decisions appealed to the Court.
    During fiscal year 2004, 108,931 new notices of disagreement were 
received by VA, 49,638 appeals were perfected and added to BVA's 
docket, 39,956 cases were physically transferred from agencies of 
original jurisdiction to BVA, and the Board decided 38,371 cases. The 
Board began fiscal year 2004 with 27,230 cases pending before it and 
ended the year with 28,815 cases pending. Accordingly, the number of 
new appeals added to the Board's docket during the year exceeded the 
number of cases it decided by 11,267, and the number of new appeals 
added to the Board's docket exceeded the number of cases transferred to 
the Board for a decision by 9,682. The Board decided 1,585 fewer cases 
than it received from field offices.
    At the end of fiscal year 2004, there were more than 161,000 cases 
in field offices in various stages of the appellate process, including 
the 31,645 on remand. Some of these appeals will be resolved at the 
field office level, but about three-quarters of them will come before 
the Board. At the end of March 2005, there were 51,508 cases on the BVA 
docket.
    During fiscal year 2004, the average time for resolving an appeal, 
from the filing of the notice of disagreement to the date of the 
decision, was 960 days. Of this total, 734.2 days was the average time 
an appeal was pending in the field office, from the notice of 
disagreement to the transfer of the case to BVA, with an average of 
225.6 days from the date of receipt of the case at BVA to the date of 
the decision. As of April 30, 2005, the average total days for cases 
pending in the field was 830 days and the average time at BVA was 204 
days. Of course, for those cases remanded, the total processing time is 
considerably longer. In fiscal year 2004, an additional 155.6 days were 
added to the total processing time of appeals for the time the case 
spent at BVA the second time following the remand, and this did not 
include the number of days the case was on remand at the field office. 
During fiscal year 2004, 7,140 cases were returned to the Board 
following remands. The remands took an average of 22 months. As noted, 
there were 31,645 cases on remand at the end of 2004. Of the 38,371 
cases decided by BVA in fiscal year 2004, approximately 21 percent had 
been previously remanded. With these long processing times, far too 
many disabled veterans die before their appeals can be decided. Three 
obvious conclusions follow from these numbers: (1) most of the delay in 
these unreasonably protracted appeals processing times is at the field 
office level, (2) far too many cases must be remanded more than once, 
and (3) multiple remands add substantially to the workload of BVA.
    The Board allowed 17.1 percent of the cases it decided during 
fiscal year 2004. Approximately 24 percent of those allowed cases had 
been previously remanded. The Board remanded 56.8 percent of the cases 
it reviewed during fiscal year 2004. Of those remanded cases, 18 
percent had been remanded previously, suggesting that the field office 
did not fulfill the Board's instructions in the remand order. Together, 
the allowed and remanded cases represented 73.9 percent of the Board's 
total case dispositions in 2004. Denials amounted to only 24.2 percent 
of the total dispositions. In addition to noting the high percentage of 
cases remanded multiple times, three conclusions can be drawn from 
these percentages: within these appealed cases, (1) agencies of 
original jurisdiction have denied many meritorious claims, (2) agencies 
of original jurisdiction have denied many cases without proper record 
development, and (3) only a relatively small percentage of these 
appellants had unwarranted appeals.
    While the high remand rate can be viewed generally as an indicator 
of poor quality, it must be noted, however, that not all remands are 
appropriate. For example, 6,355 cases involved a remand for a new 
examination and ``current findings'' because of a ``stale record'' in 
fiscal year 2004. That is an invalid reason to remand an appeal. When a 
veteran appeals, he or she is challenging the propriety of the decision 
on the record at the time the agency of original jurisdiction made the 
decision. If the examination or other medical evidence provided 
adequate medical information for an adjudication at that time, no 
additional evidence is necessary to decide the appeal. The time that 
lapses between the time of the initial decision and the decision on 
appeal, while often protracted, has no bearing on the merits of the 
appeal and is irrelevant as a matter of law. Only when BVA finds an 
inadequacy in the examination, or the record otherwise, is a remand 
appropriate to gather additional evidence. Appellants have the option 
to submit additional evidence to corroborate evidence already of 
record, shed additional light on the factual questions, or otherwise 
strengthen or reinforce the appeal, and that evidence is for 
consideration, of course, but that rule does not provide any grounds to 
remand where the existing record is complete and the evidence is 
sufficient for a fair and sound decision. Again, with an adequate 
record, the question on appeal is not the factual state of affairs 
today or degree of disability currently, but whether the decision was 
correct or incorrect when it was made.
    In, VAOPGCPREC 11-95, a decision that is legally binding upon VA 
and Board, the VA General Counsel held that BVA is ``not required to 
remand an appealed disability-benefit claim solely because of the 
passage of time since an otherwise adequate examination report was 
prepared.'' Other rules such as those in sections 3.104 (a) and 
3.105(e) of title 38, Code of Federal Regulations, prescribe procedures 
and due process requirements for addressing actual demonstrated changes 
in disabilities that occur following final rating actions. Remands on 
the premise that an examination is ``stale'' are unlawful, waste 
resources, and unnecessarily delay appellate decisions and benefit 
awards. Where an examination at the time of an initial adjudication was 
adequate for a determination on the degree of disability then present, 
where that examination supported a rating higher than the one assigned 
by the agency of original jurisdiction, and where BVA affirms that 
erroneous rating based on a later examination--perhaps years later--
that showed intervening improvement in the disability, the BVA decision 
is unlawful. The decision is unlawful because its effect is one of a 
retroactive reduction in a disability evaluation contrary to section 
5112(b)(6) of title 38, United States Code, and without observance of 
due process mandated under section 3.105(e).
    In fiscal year 2004, BVA remands were for new examinations in 
22,987 cases. Of that total, 16,632 were for reasons other than stale 
records or examinations, such as for clarification of diagnoses and to 
correct incomplete medical findings. The most prevalent reason for 
remand was to obtain additional evidence beyond that obtained by the 
agency of original jurisdiction. Among the cases remanded in fiscal 
year 2004, 48,624 included remands to obtain additional evidence. Other 
reasons for remands were to complete various procedures or actions 
previously omitted or required by intervening changes in law or 
circumstances.
    Our service officers tell us that a greater portion of the appeals 
could be resolved at the regional office level if adjudicators there 
actually read and considered the statements on the substantive appeal 
and the service officers' arguments on the ``Statement of Accredited 
Representative in Appealed Case.'' These arguments are entered while 
the appeal is still before field office and are directed at field 
office adjudicators. Based on arguments of inadequate exams, incomplete 
record development, and other errors, BVA will summarily remand a case 
where the error complained of is fairly clear on its face. 
Conscientious field office adjudicators could resolve such errors more 
promptly and without necessity for BVA review by merely reading the 
arguments. Apparently, time constraints and the lack of any production 
credit for such reviews act as a disincentive for another look by an 
adjudicator at these stages of the appeal. Reduction of the workload on 
BVA and avoidance of the added cost of consideration by BVA should 
provide an incentive for VBA management to correct this problem, 
however.
    In addition to the burden of an increasing workload, reductions in 
its staffing levels for BVA in the past few years add to the strain 
upon the Board. Despite these increasing workloads, the President's 
fiscal year 2006 budget again calls for a further decrease in staffing 
from 440 fulltime employees (FTE) to 434 FTE. This would be down from 
455 FTE in fiscal year 2001. If future backlogs and delays in appellate 
processing are to be avoided, BVA must have the additional resources 
necessary to meet this greater workload.
    In August 2001, VA proposed to amend the Board's regulations to 
enable the Board to perform record development itself and make a 
decision on that evidence rather than remand the case to the agency of 
original jurisdiction for these purposes. For several reasons related 
to unfairness and inefficiency, the DAV urged VA not to issue a final 
rule to authorize this practice. We also noted that such a rule would 
be unlawful because it would deprive claimants of the statutory right 
to have a decision by VA and one administrative appeal from that 
decision. The DAV proposed an alternative in which a special unit of 
VBA personnel in Washington could perform the remand development and 
make a new decision on the additional evidence. This would be a 
shortcut to avoid the delay of a remand to the regional office. The 
goal of speeding up the process could be accomplished without any 
denial of due process for the claimant. VA brushed aside our objections 
and recommendations and issued a final rule for this purpose in January 
2002. To handle this work, BVA created its Evidence Development Unit, 
which began operations in February 2002. The DAV, joined by three other 
organizations, challenged this rule in the United States Court of 
Appeals for the Federal Circuit. In its May 1, 2003, decision, the 
Federal Circuit invalidated the rule as unlawful. As a result, VA 
created a special VBA unit, the AMC, to perform remand functions.
    The AMC develops and decides approximately 96 percent of the BVA 
remands. The issues involved in the other 4 percent are more 
appropriately handled by the field offices. Although the average time a 
case was in remand status during fiscal year 2004 was 22 months because 
a portion of the cases were old ones remanded to field offices, the 
portion of the remanded cases that were developed and decided by the 
AMC were on remand an average of approximately 203 days. As of April 
23, 2005, the average days a case is on remand before the AMC had more 
than doubled, to 412.6 days. The AMC currently completes work on an 
average of 231 cases a week, and 20,970 cases were assigned to AMC as 
of April 25, 2005.
    This backlog resulted from the bulk transfer of approximately 9,000 
cases from the Board to the AMC in the first quarter of fiscal year 
2004. These were cases in which further development was pending at the 
Board. Of course, the AMC had both the responsibility to develop and 
adjudicate these cases. In the beginning when the AMC was first 
organized, it had to cope with new processes and adjudicators, and it 
was understandably not up to full efficiency. As a consequence, cases 
began to back up.
    Because the volume of work at the AMC was higher than expected, VBA 
developed a plan in December 2004 to have three VA regional offices do 
a portion of the remands. These offices are located in Huntington, West 
Virginia; St. Petersburg, Florida; and Cleveland, Ohio. Initially, the 
plan was that cases already developed and ready to adjudicate would go 
to the Huntington and St. Petersburg offices. Huntington was expected 
to adjudicate and authorize awards for 300 cases per month. St. 
Petersburg was expected to adjudicate and authorize 500 cases per 
month. Cleveland was expected to develop, adjudicate, and authorize 600 
cases per month. The Huntington and St. Petersburg offices found that 
some of the cases they received from the AMC were not actually ready to 
adjudicate. These offices began to undertake development also. The AMC 
currently sends 1,300 cases a month to the AMC teams at the three 
regional offices.
    Our DAV representatives at BVA observed that some of the earlier 
cases returned to the Board from the AMC were not developed in 
compliance with the remand orders. However, with AMC employees gaining 
experience, the quality of development has improved. The AMC is viewed 
as an improvement over the prior procedure in which all cases were 
remanded to agencies of original jurisdiction because cases are more 
strictly controlled and not left to languish in field offices for 
years, as too often happened before. Our representatives at the AMC 
also report that AMC adjudicators are granting the benefits sought in 
many of these appeals.
    When the BVA allows an appeal, it returns the case to the AMC 
rather than the agency of original jurisdiction to effectuate the award 
of benefits. The case often must go to the AMC because the appeal also 
involves a remanded issue. A major complaint is that the AMC delays the 
award of benefits on the allowed portion of the appeal for an average 
of 90 days. Even where the case involves no remanded issue, the case is 
sent from BVA to the AMC for the award of benefits, and this results in 
unnecessary delay. In instances where an allowed appeal involves no 
separate remanded issue, the case should be returned to the agency of 
original jurisdiction for a prompt award. Many of these claims have 
been pending for years.
    Currently, VBA has 134 FTE devoted to the AMC and its three 
outstations. The AMC has 87 FTE. St. Petersburg has 25 FTE, Huntington 
has 8 FTE, and Cleveland has 14 FTE devoted to their AMC Resource 
Units. If the BVA remand rate remains at or near 50 percent of its 
dispositions, it is projected that VBA will need to increase its 
staffing for this activity to 145-150 FTE in fiscal year 2006.
    The foregoing information suggests that VBA still reactively 
expends too much of its resources fighting brushfires and not enough on 
fire prevention. When the effects of a bottleneck become a public 
embarrassment, VBA creates a ``Tiger Team'' or ``brokers'' work from 
the overloaded activity to another station. This may serve to 
cosmetically level out the mountains, but it does not appear to 
substantively reduce the total volume of work across the system. When 
VBA does push to reduce the backlog in the short term, it increases 
work in the long term by compromising quality. This necessitates more 
rework and triggers more appeals, which overloads the system even more, 
and causes a further decline in timeliness. The timeliness and 
propriety of actions on appeals by agencies of original jurisdiction in 
preparing the case for BVA review and in completing remand actions 
after BVA review account for much of the overall appellate processing 
time and necessity to rework the case. The available data show the 
error rates in appealed cases are high and that the process takes an 
inexcusably long time, thereby delaying disability and other benefits 
for many veterans with meritorious claims and immediate needs. The 
problem of appeals languishing in regional offices for years is not a 
new one. The responsible VBA officials need to take more decisive 
action to correct this problem. Board officials need to take the 
necessary steps to reduce error rates in BVA decisions and to ensure 
binding court mandates are carried out. With recent increases in the 
appellate caseloads and no corresponding increase in staffing, 
timeliness at BVA and the AMC is likely to suffer even more. Congress 
needs to address BVA staffing more seriously.
    We appreciate the Committee's interest in these issues, and we 
appreciate the opportunity to provide you with the DAV's views. We hope 
our views will be helpful to the Committee.

    Chairman Craig. Rick, thank you very much.
    Judge Kramer, in your comments and in your testimony, 
during your service in the court you saw cases that had been 
remanded numerous times previously, and had been pending in 
appellate status for up to 10 years. It is my understanding 
that even under those circumstances, the court generally does 
not set specific timeframes within which a claim must be 
completed after it is remanded by the court.
    Do you believe it would be beneficial for the court to set 
specific timeframes in these types of cases? And does the court 
have the authority currently to do so?
    Mr. Kramer. That is a very good question. To answer the 
last part first, I think there is probably disagreement among 
the judges of the court, at least when I was there, as to 
whether the court has that authority. I believe, personally, 
that it does.
    I think that for those that believe the court does have the 
authority, I think many are reluctant to exercise that 
authority in every case. It puts an institution of less than 
100 people in a situation where they are, in essence, micro-
managing one of the largest bureaucracies in the Federal 
Government. It is almost an impossible task. And then, of 
course, by putting dates of specificity on it, it is really 
making a decision as to which claim is more important than the 
other.
    You can see from some of the previous witnesses here that 
how to pick which claim to do first is a very difficult task, 
indeed.
    I, personally, in conducting my own caseload, did sort of 
that, time-limiting in the most egregious cases, by suggesting 
in some of my orders that if certain results hadn't been 
accomplished by a certain date, that a writ to the court might 
be accepted. And then generally, when I did that, the job got 
done within the requisite timeframe. But it was a mechanism 
that I used, like I say, only in the most egregious cases and 
in relatively rare situations.
    Chairman Craig. When you used that, did you get pushed 
back? Or were they handled within a reasonable timeframe?
    Mr. Kramer. No, I think generally it worked. But if the 
court were to do that in every case, I think you would just 
find, quite honestly, that bureaucracy of writing memos to 
itself about which cases ought to be treated first probably 
would create more paperwork than to do the job that has to be 
done and get the cases resolved.
    I think the problems are probably more systemic. The 
Congress has already provided several provisions of law that 
say that there shouldn't be delay; that cases are to be handled 
with dispatch, and so forth. And it still hasn't happened. And 
I don't know that the court, if it imposed deadlines in any 
other case, would be any better at accomplishing that.
    Then you would have a situation where people would be 
coming, asking that sanctions be imposed against the Department 
for failure to comply with all these timeframes set. I think 
that would just result in additional secondary litigation that 
didn't really resolve the true litigation that needed to be 
resolved, and that is litigation on behalf of the veteran.
    Chairman Craig. Thank you, Ken.
    Cynthia, VA has reported that it expects to receive over 
800,000 claims in 2005. You noted in your testimony that a 
single claim may involve numerous disabilities, and that claims 
with multiple disabilities may take longer to complete.
    Considering that VA has reported a recent increase in the 
number of claims involving multiple disabilities, do you 
believe that VA's method of reporting the number of claims 
received accurately reflects the true size of the caseload? And 
also, does VA set different strategic goals for claims that 
involve more disabilities?
    Ms. Bascetta. Mr. Chairman, no, we think that VA's method 
definitely understates its workload. All the claims are 
aggregated, regardless of the number of issues. And they 
basically use two end products: the first for cases that have 
one to seven issues; and the second for cases that have eight 
issues or more.
    I would also point out that not all issues are equally 
complex. Some are much more objective, and could be decided 
more quickly; while others, the ones that are more difficult to 
resolve, require more judgment. And one would expect that they 
would require more time to adjudicate.
    So we have recommended that they take a look at how they 
can disaggregate their workload, and perhaps even report on 
different timeliness goals; so that honestly it could be that 
they are doing a better job than their aggregate statistics 
show. We also think that if they had better information on 
where the problems were, they could focus in on reducing 
timeliness, as well as improving accuracy and consistency.
    And with regard to your second question, they could set 
strategic goals for more complex claims, by using the numbers 
of issues as a proxy for complexity. But right now, we think 
that they would possibly have some IT obstacles that they would 
have to overcome before they could look at their workload that 
way.
    Chairman Craig. Thank you very much.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Surratt, as you know from my appearance at the 
Commission earlier this month, I am very interested in the work 
of the Disability Benefits Commission. To follow up on Senator 
Salazar's question, what is your assessment of the Commission's 
ability to truly examine the benefits system and make 
recommendations to benefit veterans?
    Mr. Surratt. Well, Senator, I don't believe the law calls 
for the Commission to examine the system, but I believe it will 
anyway. If you look at the statute that created the Commission, 
it tells the Commission to look at the standards for service 
connection and to look at the disability rating schedule to see 
if it is appropriate. And it speaks of the effectiveness of the 
substance of the programs, rather than how they are 
administered.
    I understand that we are going to probably hear testimony 
from the VA IG, and I suspect that we will probably get into 
the process some. But in my opinion, that is not the primary 
purpose of the Commission.
    Senator Akaka. When I visited the Commission, it was a very 
active group. I am, of course, interested in what they do and 
how they can continue to help veterans. And my question is 
along that line.
    Judge Kramer, it is good to see you again.
    Mr. Kramer. Good to see you, sir.
    Senator Akaka. What would be the immediate effects if the 
U.S. Federal Court review of U.S. Court of Appeals for 
Veterans' Claims cases is eliminated? And I am asking that 
because you made the comment that judicial review is a problem, 
and even suggested that the Federal Circuit should be removed. 
So what would happen if that occurred? And what would be the 
long term effects?
    Mr. Kramer. Well, I want to make clear that I am not 
advocating the elimination of appellate judicial review. What I 
am suggesting is that there are too many layers of appellate 
judicial review, just as there are too many layers in the VA 
administrative system itself.
    I don't believe that the elimination of Federal Circuit 
review, which is above the veterans' court, would do any damage 
whatsoever. But I do believe that it would improve the 
timeliness of decisionmaking for those cases that are brought 
to it by anywhere from, in many instances, 2 to 5 years.
    So that some of these horror stories that you hear about, 
about cases going back and forth between all of these different 
appellate levels, some of those could be ameliorated and 
mitigated against to some significant degree, I think, by only 
having one appellate court level of review.
    Senator Akaka. Mr. Surratt and Mr. Chisholm, would you 
please comment on Chief Judge Kramer's idea that would place an 
administrative law judge at a regional office so that a claim 
could be sent for more development earlier, with the intent of 
eliminating the time a claim is considered by the Board of 
Veterans' Appeals?
    Mr. Surratt.
    Mr. Surratt. I am not so sure--Judge, if I may ask you a 
question?
    Mr. Kramer. Surely.
    Mr. Surratt. Did you mean that the ALJs would replace the 
Board of Veterans' Appeals?
    Mr. Kramer. No. What I meant was that the object would be 
to try to keep many fewer cases from going to the Board, by 
getting the matter resolved fully at the earliest possible time 
in the decisionmaking process at the local level; and that in 
order to really do that, you would need many more capable 
people at the RO level than are presently there now. You would 
have to have a formal decision at the RO level, which could 
then only be attacked at the Board level by an appeal of great 
specificity.
    Mr. Surratt. Well, I mean, that to me adds another layer. 
Certainly, my experience with administrative law judges in the 
Social Security system is that they are good, they make good 
decisions, and they make sure the cases are developed well in 
most instances.
    I would say, though, if VA did it right with the people 
they have, you have an initial decisionmaker, you have a 
decision-review officer, and then you go to the Board. 
Obviously, an administrative law judge may be more trained in 
the law, and it would be beneficial in that effect.
    The regional office adjudicators are essentially fact 
finders. They don't rule on questions of law in any real sense, 
like courts do. Administrative law judges perhaps would 
approach that more deeply, in looking at questions of law.
    But it would be quite costly, I would think. That is a 
consideration that you are always faced with.
    Senator Akaka. Mr. Chisholm.
    Mr. Chisholm. Yes. I think in the situation that I 
described in my testimony, where the Board members are 
decentralized to the regional offices or replaced by 
independent administrative law judges, and then with the direct 
appeal to the court, that could be successful. Otherwise, it 
seems to me that you are adding another layer, and I would not 
be in favor of that.
    If I could just address one other issue, as someone who has 
represented veterans before both the court and the Federal 
Circuit, I think Federal Circuit review of claims has been 
critical in those limited circumstances where the veteran is 
challenging legal interpretations that the court has made. And 
in one particular instance in 1998, the Federal Circuit 
reviewed the standard of new and material evidence, and changed 
the entire way the court and the VA was interpreting that. And 
it was critically beneficial to veterans. So I do not believe 
that the elimination of the Federal Circuit would be a wise 
idea.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Surratt. Mr. Chairman, I would like to speak on that 
issue, also, if I may.
    Chairman Craig. Please.
    Mr. Surratt. I have great respect for Judge Kramer, but I 
have to respectfully disagree with him on that issue. First of 
all, the number of cases that go to the Federal Circuit from 
the Court of Appeals for Veterans' Claims are not that great.
    Secondly, the Court of Appeals for the Federal Circuit has 
made some very important decisions; not all of which we agree 
with, of course. But it has proven valuable, I think.
    And as to that effect upon timeliness, I don't think it 
will help that, because if you lose at Judge Kramer's court and 
you don't have a higher appeal, that is the end of the road. 
But if you can go to the Federal Circuit, sure, that takes more 
time, but it doesn't extend the time that it would otherwise 
take. I mean, that case, because the appellant chose to go to a 
higher level, of course prolongs the ultimate disposition of 
his appeal; but he certainly has another chance to have it 
allowed. So I don't see as much benefit in removing the 
jurisdiction of the Federal Circuit as Judge Kramer does.
    In addition, the Federal Circuit has jurisdiction to take 
direct challenges on VA regulations. And there are two ways you 
can do that. I mean, you can challenge a regulation in 
connection with a case being appealed that goes to the Federal 
Circuit, arguing that the regulation is not consistent with the 
law, or is arbitrary and capricious, or something of that 
nature. So you have two tracks. You would still have the 
Federal Circuit reviewing direct rule challenges. So all in 
all, I don't see that that would be as beneficial as Judge 
Kramer does.
    Chairman Craig. Thank you.
    Ms. Bascetta. Mr. Chairman, may I make an observation?
    Chairman Craig. Yes, Cynthia.
    Ms. Bascetta. I am not an attorney, so I would not tread 
into this discussion at this level of detail. But before I did 
VA disability work, I did Social Security disability work. And 
I would just like to make the observation that one of the 
things that we found in both situations is that there seems to 
be a difference in the model that the decisionmakers use at the 
initial and at the first level of appeal; in that there tends 
to be more of a medical model and approach to weighing the 
medical evidence that the VA regional offices--or the DDS in 
Social Security's case--use, as opposed to the more legal 
approach at either the Board or at the ALJ level.
    And I do think there is something there at the conceptual 
level about trying to get more legal expertise earlier in the 
process, to try to resolve what the differences might be 
between those two levels of adjudication.
    And part of what I think would be helpful would be some 
training about why there are inconsistencies in decisions on 
the same cases between adjudicators at those levels. And some 
kind of resolution and feedback about what is going on there 
could be ultimately helpful in trying to resolve some of the 
consistency and quality issues, as well as reducing rework.
    Chairman Craig. Cynthia, are you suggesting that the Social 
Security model is a better model, or a different model?
    Ms. Bascetta. It doesn't work, either.
    [Laughter.]
    Ms. Bascetta. They have the same problems. They take too 
long. They take a little less time. I think they are at about 
95 days now. But they have an all-or-nothing decision. It is 
not as complicated as VA in doing a partial disability 
decision.
    But in terms of inconsistency, they have precisely the same 
problem as VA. And their award rate on appeal is very high. I 
think it is about 63 percent now. So they definitely have 
significant differences in how they are weighing the same 
evidence.
    Chairman Craig. Thank you.
    Senator Thune, welcome.
    Senator Thune. Thank you, Mr. Chairman. And thank you and 
Senator Akaka for focusing on this very important issue. 
Reducing the backlog of claims at the VA is essential to making 
sure that our veterans are getting the compensation to which 
they are entitled.
    And I commend the VA for the efforts that have been made to 
mitigate that problem, from hiring new staff to trying to 
automate records and streamline some of the case management. 
But we still have an awful long way to go, and that backlog 
still exists.
    There are, as I think have been enumerated today, a number 
of reasons perhaps for that backlog, from ineffective methods 
of adjudicating claims to inefficient appeals process. But I 
think in my State of South Dakota there are veterans who wait 
over 3 months to have their claims processed. We have a backlog 
of over 1,500 claims, and 175 claims that are currently over 6 
months old. So I would say, Mr. Chairman, that this simply 
isn't efficient. It is not good enough. And America's veterans 
deserve better. And I know that you are, and I believe this 
Committee is committed to making sure that we are providing 
them with a system that works.
    So this hearing is not about assessing blame. It is really 
about trying to get to the problem, and trying to figure out a 
solution. So thank you for your good work.
    A question, perhaps, for Mr. Surratt and Mr. Chisholm. And 
that is, many of these issues are resource-oriented issues. If 
you have more money, you can hire more staff; you can do more 
automation, new computers, that sort of thing.
    I guess my question would be, if you had more money, if we 
had more resources to allocate to this problem, what would you 
do with it? I mean, what is the most efficient way of achieving 
a higher level of success, if we were able to find funds to do 
that?
    Mr. Surratt. Well, the money should be invested in 
training, more training. The VA has a problem of a large 
turnover in adjudicators. Many of their older, experienced 
adjudicators are at retirement age and are leaving. And the 
experienced adjudicators do not have time to conduct training 
and decide cases and do quality reviews, all three at the same 
time.
    So somewhere along the line, VA may have to slow down on 
the claims processing, unfortunately, in the short term, to 
have experienced people, maybe retirees, come back--they have 
done that before--and train the new adjudicators better; focus 
on, as we have heard today, getting it right the first time.
    So that takes an investment of resources up front, and 
perhaps some loss of timeliness in the short term for a long-
term strategy of greater efficiency. So with more people, as 
you get them trained to decide claims and train other new 
people, then eventually you will catch up, if you are ever to 
catch up.
    So again, devoting resources to training, to better quality 
control, and to not push production. As I have stated in my 
testimony, what the problem is, when VA starts getting these 
large backlogs, they start pressing their adjudicators to put 
out larger numbers of cases. And when they do that, they start 
making more mistakes. And then their cases have to be reworked, 
and that in the long term just creates a vicious cycle.
    Senator Thune. Slows it down, right. OK. Anything to add, 
Mr. Chisholm?
    Mr. Chisholm. I think training is critical. The other thing 
that I think is working at the regional office level is the 
decision-review officers. These are the folks that have the 
second--you can have sort of an internal appeal, if you will, 
at the regional office. And the decision-review officer has the 
power to do de novo review. And I am seeing a lot of success at 
that level.
    And I think the VA should increase the number of DROs in 
the regional offices. And I think you will see more cases 
cleared as a result of that, and not being appealed.
    Senator Thune. All right. Judge Kramer, in some of your 
series of recommendations you talk about ALJs and consolidating 
at the appellate level adjudication. Just curious, would there 
be an argument to be made for allowing folks to go directly to 
the circuit court of appeals wherever they are, as opposed to 
going through the current process?
    Mr. Kramer. Well, one of the points that I put in my 
written testimony, that I didn't include in my 5-minute version 
for lack of time, was that I do believe in a single level of 
appellate review. I know that obviously people who lose, as you 
can tell from some of the other testimony here--and I 
understand that--if you lose at our level, you would like 
another opportunity to win at an additional level. But you also 
have to balance that against cost, time, and efficiency.
    The other alternative suggestion I made, which I think is 
more draconian than to eliminate Federal Circuit review, is to 
simply merge the veterans court into the Federal Circuit; 
increase the expertise of the Federal Circuit in veterans' law. 
I don't favor that as a method of one level of appellate review 
over the method that I most recommended because, one, I believe 
that most people feel that review focused exclusively on 
veterans' cases is a good thing; and No. 2, the primary focus 
of the Federal Circuit, even if you merged the veterans' court 
into the Federal Circuit, would still be intellectual property 
law, which is the basis for which they were created in the 
first place.
    But if you had to choose, I think, between two levels of 
judicial review, or one level conducted only by the Federal 
Circuit with a merged Federal Circuit court, I think that would 
be preferable. In fact, if you look at the Federal Circuit 
history, its own growth is one of merger and spin-off, merger 
and spin-off, among Article I and Article III courts.
    Senator Thune. Thank you, Mr. Chairman. I see my time has 
expired.
    Chairman Craig. Senator Obama, welcome back.
    Senator Obama. Thank you very much, Mr. Chairman. Thank you 
to the panel. I am sorry I missed your live testimony, but I 
had an opportunity to read the written testimony.
    My first question, I guess, is for Mr. Surratt. We had the 
Secretary out to Illinois at a town hall meeting in response to 
some of the discrepancies that we were seeing in terms of 
benefits across the country. And I had an opportunity to review 
the IG report on this problem.
    One of the things that was striking was the huge gap 
between veterans' benefits for those who had VSOs representing 
them, and those who did not. And I am wondering what you think 
we can do to make sure that all veterans are aware of the need 
for an advocate in these circumstances.
    And I am wondering whether that is something that the VSOs 
have done to actively encourage their use. Why it is that there 
might be big differences in some States versus others in terms 
of the utilization of VSOs.
    Mr. Surratt. What I would speculate--and that is purely 
what it is--is that those people who are not represented by 
VSOs or attorneys do so because they choose not to be 
represented. We certainly put out, all organizations put out, 
literature. I think the VA notifies veterans of their right to 
free representation from VSOs. And as the figures demonstrate, 
there is a better chance of getting higher benefit levels if 
you are represented. And the VSOs look behind the VA decision, 
and the VA is pressured to make fast decisions. And in the 
appellate process, they catch errors.
    Senator Obama. I guess what I am wondering is, do we let 
veterans know that, you know, if you just look at the studies, 
that there may be $6,000 more in benefits if you use a VSO or 
an attorney than if you don't? I mean, because my suspicion is 
that you might have a veteran going in there feeling like, 
``Well, this is something I can handle myself,'' but if 
somebody told him, ``You know, on average--may not happen here, 
but on average--you are going to get $6,000 more if you are 
using an attorney or a VSO advocate,'' that that might make 
some difference in terms of what they decide to do.
    Mr. Surratt. Well, we have never put it in terms of money. 
We didn't have the data.
    Senator Obama. Right.
    Mr. Surratt. But we have put it in terms of, ``You have a 
better chance of getting your case allowed and getting the 
proper decision, if you are represented.'' I, personally, 
wouldn't want to use money as a selling point. We have the data 
before us, and I am sure that that will be widely disseminated.
    But, yes, we should encourage veterans to seek VSO 
representation in any way we can, and I think we do that. And 
again, I would just guess that the majority of those who are 
not represented are not represented because of lack of 
knowledge, but because of choice.
    Senator Obama. OK. Judge Kramer, I just had a quick 
question for you. I was intrigued by your suggestion that VA 
physicians fill out a standard form addressing causation when 
treating new conditions. How much, in your opinion, is the 
delay that exists caused by a lack of medical verification?
    Mr. Kramer. Well, there is a long-term provision in the 
law--certainly predates me; and not much does that--for the VA 
to do what other governmental entities don't do, and that is 
help a claimant gather evidence for their claim. And in my 
experience, the evidence most often missing is evidence of 
causation.
    And right now, the rules are very murky and ambiguous, 
despite the passage of the Federal Claims Assistance Act, as to 
exactly when such a medical opinion must be rendered. And it 
has been the cause over my career of much litigation, many 
remands, and elongating the claims history of claims 
significantly. And so I think an early resolution of when that 
kind of a medical opinion has to be offered, clarification by 
the Committee as to that law, would be extraordinarily helpful.
    Now, as you can tell--and as some of the commentators, and 
correctly so, suggested--at least there is some front-end cost 
to some of the things that I have suggested. You have 800,000 
new claims. You know, not all of them will involve medical 
causation, of course. But you would have to put some parameters 
on when such an opinion was going to be rendered, because you 
can't, obviously, issue 800,000 opinions from the get-go.
    But I do believe that the fight over when you should get an 
opinion--and we found many cases at the court, for example, 
that the key questions had never been addressed.
    Right now, under the law, VA has, in essence, huge 
discretion as to when to obtain such an opinion. Under the old 
law, you had to have, in essence, what they call a rounded 
claim in order to get VA assistance. As the court interpreted 
it, you had to have possible evidence of a present disability, 
possible evidence of an event in service, possible medical 
evidence in most cases of a relationship between the two.
    There was a lot of complaint about that; a lot of cause for 
dismay. The Veterans' Claims Assistance Act, I think its 
primary objective was to fix that problem. And yet, the very 
provision in the Veterans' Claims Assistance Act that deals 
with the obtaining of medical opinions, in essence, requires 
evidence of a medical connection before the VA is required to 
go get an opinion. So we are right back where we started from.
    So I would suggest that a lot could be gained on changing 
this specific provision, clarifying the rules as to when such a 
medical opinion has to be rendered.
    Senator Obama. Thank you, Mr. Chairman.
    Chairman Craig. Lady and gentlemen, we are running out of 
time, and I am disappointed in that. I have several more 
questions I would like to ask. So I am going to beg your 
indulgence, to submit them to you in writing to gain your 
response.
    Mr. Chisholm, I am curious about your suggestion to provide 
legal counsel earlier on, and the ramifications of that; and a 
variety of other aspects of some of the comments that Mr. 
Surratt has made. So I will do that. And I understand our 
Ranking Member has other questions he would like to ask, also. 
So we will submit some questions to you in writing.
    Let me thank you all very much for your time here today and 
your preparation. It is extremely important to all of us that 
we might nudge this system a little further into 
responsiveness. I know that the cry for resources is always 
there, and that is a difficulty. So we are examining it from 
two levels; both resources, and structure and function. And I 
think that those are all important aspects as to the process 
that will best render our veterans as immediate adjudication of 
their claims as is possible.
    And the backlogs are at times, by number, overwhelming to 
try to understand why we can't get a handle on them; but we 
have seen the Veterans' Administration push forward very 
aggressively. We hope that will continue. We will continue to 
nudge them and observe and, if need be, appeal to the Congress 
to make some statutory changes.
    Judge Kramer, I appreciate your insight into it. Your 
experience obviously is very valuable to us, and your offer to 
stay in touch. We will do just that with you, as I know we will 
with these other gentlemen and with Cynthia, as we work through 
this issue.
    Thank you all very much for your time, and the Committee 
will stand adjourned.
    [Whereupon, at 4:16 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

    Response to Written Questions Submitted by Hon. Larry E. Craig 
                          to Daniel L. Cooper
    Question 1. Currently, priority access to VA health care is given 
to combat theater veterans who are within two years of their military 
discharge date. To be consistent with that policy, and to encourage 
veterans to file claims within close proximity to their service 
discharge, should there be priority treatment of claims that are filed 
within two years after service, especially if that service occurred 
during a wartime period.
    Answer. The Veterans Benefits Administration (VGA) is giving top 
priority to the benefit claims of all returning war veterans who are 
seriously injured, and certainly providing the best possible service to 
these returning heroes must remain our highest priority. VBA also gives 
priority to claims from terminally ill veterans, homeless veterans, 
veterans with severe financial hardship, former prisoners of war, and 
veterans over age 70.
    VBA has a number of initiatives to assist service members 
separating from active duty in filing claims promptly. Under the 
Benefits Delivery at Discharge (BDD) program--in place at 140 military 
installations around the country and overseas--active duty service 
members within 180 days of separation are encouraged to file disability 
compensation claims with Department of Veterans Affairs (VA) staff who 
are serving at military bases either on a full-time or itinerant basis. 
Service members can complete the necessary physical examinations and 
have their claims evaluated before or closely following their military 
separation dates. In most cases, disabled service members participating 
in the BDD program begin receiving VA disability compensation benefits 
within 60 days of their separation from active duty, which serves to 
ease the transition from active duty to civilian status. In fiscal year 
(FY) 2004, the BDD Program received approximately 40,000 claims from 
separating service members.
    Through the joint VA/Department of Defense (D0D)/Department of 
Labor (DCL) Transition Assistance Program (TAP) and Disabled Transition 
Assistance Program (DTAP), VBA conducts extensive outreach to ensure 
separating service members file claims for VA benefits. Service members 
are fully briefed on the VA benefits available to them and encouraged 
to apply for the benefits. Since October 2002, VGA military services 
coordinators have conducted nearly 20,000 briefings, which were 
attended by almost 700,000 service members and families including 
members of the Reserve and National Guard. VBA also conducted 1,500 
briefings attended by 40,000 service members based overseas.
    In view of the fact that VA currently gives priority to claims 
filed by seriously injured service members who participated in 
Operation Enduring Freedom (OEF) or Operation Iraqi Freedom (OIF) and 
the measures already in place to assist service members leaving service 
in filing claims for VA benefits, VA does not believe it is necessary 
to provide priority handling of all claims filed within two years after 
service in order to encourage filing for VA benefits. VA's goal is to 
provide quality, timely, and compassionate service to all claimants.
    Question 2a. At the hearing, Judge Kramer recommended that Congress 
amend the duty-to-assist provision contained in 38 U.S.C. Sec. 5103A(d) 
to clarify the circumstances under which VA must provide a medical 
opinion as to whether there is a causal link (or nexus) between a 
current disability and service. Under what circumstances does VA 
provide a medical nexus opinion? In general, must there be some medical 
evidence of a causal relationship between a current disability and 
service before such an opinion is provided?
    Answer. VBA requests a medical nexus opinion when it is deemed 
necessary to decide a claim, depending on the facts of the individual 
case. 38 U.S.C. Sec. 5103A(d). The statute and the implementing 
regulation 38 CFR Sec. 3.159(c)(4) provide guidelines on when a medical 
examination or medical opinion is necessary to decide a claim. This 
regulation was found valid by the Federal Circuit Court in Paralyzed 
Veterans of America (``PVA'') v. Secretary of Veterans Affairs, 345 
F.3d 1334 (Fed. Cir. 2003). VA will obtain a medical examination or a 
medical opinion if the information and evidence of record does not 
contain sufficient competent medical evidence to decide the claim but:
     The record contains competent lay or medical evidence of a 
current diagnosed disability or symptoms of a disability;
     The evidence establishes that the veteran suffered an 
event, injury, or disease in service that the veteran contends is 
associated with the claimed condition; and
     The evidence indicates that the claimed disability or 
symptoms may be associated with the established event, injury, or 
disease in service or with another service-connected disability.
    It would be helpful for a claimant to submit medical evidence of a 
causal relationship between a current disability and service, but that 
is not required to justify a request for an examination or opinion. VA 
regulations, however, require that the record contain some evidence 
indicating a possible association between the claimed disability or 
symptoms and the occurrence of the event, injury or disease in service. 
VA regulations also state that competent evidence of post-service 
treatment or other evidence could satisfy this requirement.
    Question 2b. What modifications, if any, could be made to improve 
or clarify that duty-to- assist provision?
    Answer. At the present time, VA has no statutory modifications to 
suggest.
    Question 3. Since 2000, VA has reported a sharp increase in the 
number of rating claims filed each year and VA has attributed that 
increase in part to ``older veterans'' filing claims for the first 
time. What factors have led to this increased filing rate by older 
veterans?
    Answer. An increase in claims from older veterans may be 
attributable to several factors. VA has increased its outreach efforts 
to prisoners of war, 90 percent of whom served during World War II, and 
other older veterans. Additionally, a number of changes in VA statutes 
and regulations have led to increased claims by older veterans. In 
2001, VA amended its regulations to provide a presumption of service 
connection for type 2 diabetes based on herbicide exposure. This 
presumption largely benefits Vietnam-era veterans. Also in 2001, a 
change in law authorized VA to pay pension to veterans of a period of 
war who are 65 years of age or older irrespective of whether the 
veterans are permanently and totally disabled. Congress has also added 
diseases to the statutory list of disabilities that VA is authorized to 
presume are related to being a prisoner of war. VA also believes it 
receives more claims for increased benefits as veterans' service-
connected disabilities worsen with age.
    Question 4. The Government Accountability Office has identified 
external sources, such as court decisions and laws, as factors that may 
impede VA's ability to improve its disability claims processing 
performance. What measures can VA take to better respond to these 
external events?
    Answer. VA agrees that court decisions and changes in laws can 
adversely affect VBA's claims processing performance. VBA monitors 
legislative and judicial developments and works with VA's Office of 
Congressional and Legislative Affairs and Office of the General Counsel 
to try to analyze the anticipated effects of pending legislation and 
court cases on VGA and to explain these effects to Congress. When VBA 
disagrees with a court decision, it works with the Office of the 
General Counsel and Department of Justice to determine whether an 
appeal is viable. VBA also actively participates in offering views on 
pending bills.
    Question 5. At the May 26 hearing, Judge Kramer and Mr. Chisholm 
each provided recommendations for improving the VA claims adjudication 
and appeal system, including placing Administrative Law Judges or 
Veterans Law Judges at the regional offices. Do you have any comments 
regarding those recommendations?
    Answer. Judge Kramer and Mr. Chisholm made a number of 
recommendations at the hearing. These recommendations included placing 
Veterans' Law Judges (VLJs) of the Board of Veterans' Appeals (BVA) in 
VA regional offices, closing the record at an earlier stage in the 
appeal process, eliminating the right to appeal U.S. Court of Appeals 
for Veterans' Claims (CAVC) decisions, imposing statutory time limits 
for each step in the adjudication process, simplifying VA appeals 
procedures, and taking steps that will encourage claimants to retain 
private attorneys earlier in the claims process.
    As to the first of those recommendations, neither VGA nor BVA 
believes that VLJs should be based at regional offices. The existing 
appeals process with layers of review was established, in part, to 
ensure fairness and integrity and promote claimant confidence in the 
decisions. Decentralization or regionalization of BVA by placing VLJs 
at the ROs could affect the appearance of BVA independence by creating 
a perception in the minds of appellants and their representatives that 
BVA is an extension of the regional office and not a separate and 
independent body that exists to fairly and impartially consider their 
appeals.
    Decentralization or regionalization would also pose substantial 
challenges to BVA in maintaining the efficiency of its operations. 
Given the rapid changes in veterans law and the complexity of the VA 
disability system, it is advantageous for VLJs to work in a single 
location where they have the opportunity for a quick and free exchange 
of ideas and information arid can quickly adapt to changes in the law. 
This kind of environment fosters consistency in understanding and 
application of the law. Additionally, regionalization of BVA would 
create logistical problems, increase expenditures for support services 
and legal research resources, and make management of the case flow and 
the conduct of quality reviews more difficult.
    Judge Kramer also recommended closing the record at an earlier 
stage in the appeal process. This recommendation has been explored a 
number of times in recent years. VBA will continue to explore this 
possibility as it looks for ways to improve the process. VA is 
committed to maintaining a veteran-friendly benefits system in which 
all relevant evidence is available to decision makers. VA recognizes, 
however, that an open record contributes to protracted appeal 
processing and therefore to delay in deciding appeals. VA will consider 
ways to prevent the protracted piece-meal submission of evidence and 
the delays it causes, while protecting due process rights of claimants.
    The remaining suggestions offered by Judge Kramer and Mr. Chisholm 
would require amendments to VA statutes. At this point, VA does not 
propose any statutory changes. If VA does in the future, it will be 
with the goal of providing the best possible service to and ensuring 
the rights of our Nation's veterans and their families.
    Question 6a. Following up on our discussion regarding the increase 
in Total Disability due to Individual Unemployability (TDIU) cases, 
what, if any, collaboration is there with VBA's Vocational 
Rehabilitation and Employment (VR&E) Counselors prior to a TDIU rating 
being assigned?
    Answer. There is no systematic or institutionalized collaboration 
currently between regional office rating staff and vocational 
rehabilitation and employment (VR&E) counselors prior to a total 
disability due to individual unemployability (TDIU) rating being 
assigned. However VBA is looking into how it might use vocational 
assessments in making determinations of TDIU entitlement.
    Question 6b. After a TDIU rating has been assigned, is there any 
collaboration with VR&E Counselors to monitor whether VR&E services, 
such as independent living, would be appropriate?
    Answer. By statute (38 U.S.C. Sec. 1163) and regulation (38 CFR 
Sec. 3.341(c)), each time a veteran is rated totally disabled on the 
basis of individual unemployability, the VR&E staff is notified so that 
an evaluation may be offered to determine whether the achievement of a 
vocational goal by the veteran is reasonably feasible or if independent 
living services would be appropriate.
    Question 6c. How frequently is a veteran with an assigned TDIU 
rating re-evaluated to determine whether barriers to employment 
continue to exist?
    Answer. There is no uniform set schedule for re-evaluating veterans 
rated totally disabled based on individual unemployability. VA requests 
re-examinations when there is a need to verify either the continued 
existence or the current severity of a disability. Generally, re-
examination is required if it is likely that a disability has improved 
or if evidence indicates there has been a material change in a 
disability or that the current rating may be incorrect.
    VA regulations, 38 CFR Sec. 3.327(b), provide general guidelines 
for requesting VA examinations in compensation cases and explaining 
when future periodic examinations will not be scheduled, such as when 
the disability is permanent and there is no likelihood of improvement. 
This is discussed in more detail in response to question number 13.
    Question 6d. Please comment on whether there should be an age-
appropriate limit on the award of a TDIU rating.
    Answer. VBA has looked into whether to place an age-appropriate 
limit on the award of a total rating based on individual 
unemployability. While it seems intuitive that individuals who have 
reached retirement age could be considered to have likely retired and 
that those who are considered retired are no longer in need of a 
supplemental compensation payment due to a disproportionately disabling 
effect of service-connected conditions on employability, in 
consideration of this question VA has found that establishing such an 
age cut-off point would be difficult. In the past, age 65 was 
considered retirement age. However, the age at which workers retire has 
increased overtime. In recent years, legislative changes, new types of 
retirement plans, and increases in life expectancy have led to 
differences in retirement ages. Also, according to the Bureau of Labor 
Statistics, the employment patterns of older Americans suggest that one 
can be ``retired'' and still be employed, at least part time. In 
addition, rates of self-employment rise with age. VA believes that 
focusing on improving adjudication of claims for total ratings based on 
unemployability and ensuring adequate controls on cases where total 
ratings based on individual unemployability have been established 
(including consideration of age) will better serve veterans.
    Question 7a. I understand that VA has 57 regional offices (or 
`ROs') that administer disability compensation benefits. Over the last 
decade, have you observed that some ROs are consistent in their good 
performance whereas others are consistent in their poor performance? If 
so, how can VA take advantage of attributes of the ROs that, on a year-
to-year basis, consistently outperform the others?
    Answer. There are regional offices that consistently demonstrate 
high performance year after year. VBA analyzes the practices and 
performance of these offices in order to identify best practices that 
can be shared across the organization. As one example, VBA conducted a 
cycle-time study which involved analyzing each segment of the claims 
process in an effort to identify ways to reduce the overall processing 
time. The study initially focused on higher performing stations, 
observing and documenting best practices. The study then concentrated 
on offices experiencing performance difficulties to compare and 
validate findings. The results of the cycle-time study were shared with 
all regional offices for use in improving performance.
    VBA also calls on high-performing offices to provide instructors 
for centralized training sessions. These sessions are held throughout 
the year for specific groups of employees, including those newly hired, 
those recently promoted to first-line supervisory positions, and new 
division level managers. Additionally, senior leaders within the 
organization are asked to enter into structured mentoring relationships 
with employees selected for formal development programs, including 
VBA's Assistant Director Development Program and VA's Senior Executive 
Service Candidate Development Program. VBA further leverages the 
knowledge and skills of the top-performing offices by frequently 
looking to those offices for people who can fill leadership positions 
at other offices.
    Question 7b. Should more work and, consequently, more staff 
resources be directed towards the higher performing ROs?
    Answer. VBA does employ a strategy of shifting workload and 
resources to the highest performing regional offices. This is 
accomplished through our resource allocation model, a brokering 
strategy, and the use of overtime funds.
    Over the last few years, VBA has emphasized a performance-based 
resource allocation methodology that provides additional resources to 
high-performing regional offices. Regional offices are evaluated in 
terms of their weighted share of workload receipts and their ability to 
meet and/or exceed operational performance indicators in accuracy, 
timeliness, appeals resolution, and appeals timeliness. By linking the 
resource allocation process to strategic performance measures, higher 
performing stations receive additional resources. This ensures VBA is 
reinforcing its commitment to the organizational mission.
    VBA also uses a ``brokering strategy'' to balance the inventory of 
pending claims across stations. Cases are sent from stations with high 
inventories to other stations with the resources to take on additional 
rating work. This strategy allows the organization to address both 
local and national inventory by maximizing resources where they exist
    Overtime funds are targeted to specific goals throughout the year. 
Regional offices that meet specified performance targets in a given 
month are allocated overtime the following month. This approach allows 
higher performing stations to receive additional resources and also 
helps the organization make progress toward achieving its national 
performance targets.
    Questions 8a-8b. Your testimony cited the recently released VA 
Office of Inspector General report which found that the VA disability 
compensation program does not reflect modern concepts of disability. If 
the disability system is not based on ``modern concepts of 
disability,'' then on what is it based?
    If the disability system is outmoded, how do we know whether we are 
paying veterans enough, or too much, disability compensation?
    Answer. The VA disability system is based on 38 U.S.C. Sec. 1155, 
which requires VA to adopt and apply a schedule of ratings of 
reductions in earning capacity from specific injuries or combinations 
of injuries based, as far as practicable, upon the average impairments 
of earning capacity resulting from such injuries in civil occupations. 
The VA rating schedule provides, for each listed medical or 
psychological disability, the symptoms or specific findings that 
warrant a particular disability level, and Congress sets the amounts of 
compensation for each percentage of disability. The determination by VA 
of the range of disability percentages available for each condition is, 
in essence, a determination of how disabling the condition is deemed to 
be, on average, to a person working in a civil occupation.
    To give an example, a person whose knee may have pain with 
limitation of extension to 10 degrees (so that the leg cannot be fully 
straightened without pain) is considered 10 percent disabled. VA 
determined that painful limitation of extension causes, on average, a 
degree of disability from the average civil occupation sufficient to 
assign a 10 percent evaluation, and Congress determined that a 10 
percent evaluation justifies a payment of $108 per month.
    VA thinks it is a fair criticism that civil occupations may mean 
something different today than it did when the rating schedule was 
first created. The work done by Americans today is certainly different 
in some respects than it used to be. It may not also hold true that all 
disabilities of a particular percentage can be said to be equivalent in 
terms of the degree to which they impair average earnings in civil 
occupations.
    VBA has worked to update the criteria for assigning different 
percentages of disability for particular conditions. The rating 
schedule is comprised of 15 body systems, 13 of which have been updated 
since 1994. VA has made the rating criteria more objective and 
incorporated current ideas about the manifestations, course, and 
treatment for diseases and injury residuals.
    The Inspector General report mentioned concerns that the rating 
schedule better reflects functional impairment instead of impairment to 
earnings capacity. VA recognizes that it may be the case that a person 
with a particular level of symptomatology is more or less disabled from 
his or her work than is indicated by the rating assigned. A person with 
a 100 percent evaluation (which on average indicates total disability) 
may not necessarily be unable to do his or her job. Also, in 
compensating based on an assessment of average impairment, VA will 
always overcompensate some for the actual effect of a set of symptoms 
on particular employment and under compensate others. A veteran who is 
totally disabled due to a service-connected condition will receive 
$2,299 a month in 2005 or $27,588 a year tax free. If the veteran was 
earning $24,000 a year and now cannot work due to the totally disabling 
service-connected condition, the VA compensation rate is more than 
their previous wages. However, if the veteran was earning $150,000 a 
year and now cannot work due to the totally disabling condition, the VA 
compensation rate is not nearly enough to cover his or her actual wage 
loss.
    VA expects that the Veterans' Disability Benefits Commission 
established by Congress in 2003 will study this issue.
    Question 9. In your statement, you noted that eligibility for 
disability compensation drives eligibility for other programs, such as 
vocational rehabilitation. Does that serial approach to eligibility 
provide an effective means of restoring the capability of veterans with 
disabilities to the greatest extent possible? Would creating a more 
integrated system of programs better serve that purpose?
    Answer. Recently there has been an increased focus on the seamless 
transition of service members leaving military service and entering the 
civilian world. The provision of benefits, including vocational 
rehabilitation benefits, has been integrated into the process early on. 
Regional office employees visit injured service members at their local 
military treatment facilities to provide information about the VA 
benefits and services available. Where possible, vocational 
rehabilitation and employment (VR&E) staff meet with injured service 
members while they are still on active duty to begin the vocational 
assessment and counseling process. VR&E and veterans' service center 
staffs work closely together to expedite a memorandum (temporary) 
rating which projects a 20 percent or greater service-connected rating. 
This memorandum rating provides the vocational rehabilitation counselor 
with the authority to evaluate a service member and to write a plan for 
vocational rehabilitation services prior to making a final compensation 
determination.
    VA partners with the Department of Defense (DoD) and the Department 
of Labor to conduct transition assistance program workshops to provide 
comprehensive veterans' benefits and program information to service 
members. In addition, VA conducts disabled transition assistance 
program workshops to provide information about disability benefits and 
vocational rehabilitation to those service members who could 
potentially be medically discharged or have a service-connected 
disability.
    In addition, a memorandum of understanding (MOU) between DoD and VA 
for the purposes of defining data sharing between the departments is 
currently in the concurrence process. This MOU establishes the 
respective responsibilities and authorities of DoD and VA to share data 
as defined by the Health Insurance Portability and Accountability Act 
(HIPAA). The MOU describes those circumstances in which it is 
appropriate to share protected health information and other 
identifiable information between the departments.
    Question 10. One key measure of performance that VA tracks and 
reports with regard to all rating claims is the ``average number of 
days to complete.'' Does VA track separately the average number of days 
to complete rating claims that are processed through special units or 
programs, such as the claims processed through the Benefits Delivery at 
Discharge initiative.
    Answer. VBA does track the ``average days to complete'' for the 
benefits delivery at discharge (BDD) program. In most cases, disabled 
service members participating in the BDD program begin receiving VA 
disability compensation benefits within 60 days of their separation 
from active duty.
    Question 11. As a complicating factor of, and a partial explanation 
for, a rapidly growing disability compensation program, your testimony 
cites the 110 diseases that are presumptively related to special 
military service. How many service-connected ratings has VA awarded 
since fiscal year 2000 on the basis that diseases were presumptively 
related to service?
    Answer. Data identifying disabilities granted on a presumptive 
basis is available only for decisions rendered on or after May 2003. 
With the full use of rating board automation 2000 (RBA2000), one of the 
VETSNET applications, VBA is now capturing and retaining greater levels 
of detailed information on disability determinations. For the timeframe 
May 2003 through May 2005, VBA identified a total of 89,344 rating 
decisions granting presumptive service connection for 94,411 
disabilities to 82,378 veterans.
    Question 12a. I understand that VA has the authority, in individual 
cases, to rebut the presumption that a presumptive disease is related 
to special military service. Does VA keep track of how frequently it 
rebuts a presumption of service connection?
    Answer. VBA does not track how frequently it rebuts a presumption 
of service connection. VBA believes it to be exceedingly rare.
    Questions 12b and 12c. Does VA request evidence that it believes 
exists that may rebut a presumption of service connection?
    Does VA solicit medical opinions about presumptive conditions that 
may be explained by post-service events?
    Answer. In response to parts B and C of this question, VA 
decisionmakers, if put on notice that evidence may exist that would 
rebut the presumption, may request such evidence from the claimant or 
may request a medical opinion. VA's policy as stated in 38 CFR 
Sec. 3.103(a) is that, in proceedings before VA, it is the obligation 
of VA to assist a claimant in developing the facts pertinent to the 
claim and to render a decision which grants every benefit that can be 
supported in law, while protecting the interests of the government. VA 
regulations require the claimant to cooperate fully with reasonable 
attempts to obtain relevant records and to attend examinations that are 
deemed necessary. Title 38 CFR Sec. 3.307(d)(1) provides that evidence 
that may be considered in rebuttal of service incurrence of a 
presumptive disease will be ``any evidence of a nature usually accepted 
as competent to indicate the time of existence or inception of a 
disease and medical judgment will be exercised in making determinations 
relative to the effect of intercurrent injury or disease.
    Question 13a. Your testimony notes that almost 2.6 million veterans 
are receiving disability compensation today, more than at any time in 
U.S. history. I understand that a veteran may, at any time, file a 
claim to increase a service-connected rating if the veteran believes 
that the condition has worsened. Conversely, VA may require that a 
service-connected veteran be re-examined to determine if the effects of 
a 
service-connected disability have improved or still exist, thereby 
necessitating a decreased rating. What is VA's current policy on 
requesting that veterans appear for reexamination?
    Answer. VA's policy on requesting re-examinations is stated in our 
regulations, 38 CFR Sec. 3.327. In general, that provision states that 
re-examinations, including periods of hospital observation, will be 
requested whenever VA determines that there is a need to verify either 
the continued existence or the current severity of a disability. 
Generally re-examinations will be required if it is likely that a 
disability has improved or if the evidence indicates that there has 
been a material change in the disability or that the current rating may 
be incorrect.
    The decision maker has discretion to request a re-examination 
between 2 years and 5 years after the initial examination or any other 
scheduled or future examination; however, re-examination can be 
scheduled by a VA decisionmaker within a shorter period of time. One 
example cited in the regulation is that a pre-stabilization rating 
requires re-examination within the second 6-month period following 
service. Certain cancers also have a 6-month future examination 
schedule.
    The regulation also provides guidance on when a future examination 
should not be requested. A future examination should not be requested 
when a disability is established to be static or persisting without 
material improvement for a period of 5 years or more. When disability 
is permanent with no likelihood of improvement, re-examination is also 
inappropriate. Under the regulations, re-examinations should also not 
be ordered when there is only a minimum rating in place or when a 
combined rating would not be affected by reduction of the rating for a 
particular disability. For example, if a disability was reduced from 10 
percent to 0 percent this might not reduce a combined evaluation. The 
regulations instruct that VA not re-examine veterans over 55 years of 
age for improvement except in unusual circumstances.
    Question 13b. Does VA track the results of these re-examinations?
    Answer. VA does not track and analyze the results of re-
examinations in any systematic way. VA does generate examination 
reports, and these would be associated with the claims folder of the 
person who is re-examined.
    Question 13c. How many veterans has VA requested appear for 
reexamination since fiscal year 2000? Is that a decline over previous 
periods?
    Answer. For the period October 1999 through May 2005, VBA scheduled 
95,899 routine future examinations. This represents a decline from the 
number of re-examinations scheduled in fiscal year (FY) 1997 through 
fiscal year 1999.
    Question 13d. Because of the growing number of original and repeat 
claims, has VA been reluctant to add to that workload by requesting 
that veterans appear for re-examination?
    Answer. In response to a recommendation by the VA Claims Processing 
Task Force, VBA temporarily requested that decision makers in the field 
apply a longer future examination suspense period because of workload 
considerations. However, VA resumed establishing the normal time 
periods for re-examinations in fiscal year 2004.
                               __________
    Responses to Written Questions Submitted by Hon. Larry E. Craig 
                          to Robert V. Chisolm
    Question 1a. Would attorneys be limited to charging fees on a 
contingent basis?
    Answer. Contingent fee agreements would seem to be the most 
practical solution. First, many veterans lack the money to pay either a 
flat fee or an hourly fee. That is of course why the veteran is usually 
seeking disability compensation and similar benefits. Second, Congress 
has already provided for the use of contingent fees in the present 
version of 38 U.S.C. Sec. 5904. Contingent fees have the additional 
benefit of linking the attorney's fee to success on the veteran's 
claim. If the veteran does not receive an award of past-due benefits, 
the attorney will not be paid. This also incentivizes the attorneys to 
learn this area of the law. Finally, Congress has provided that Social 
Security applicants can hire attorneys on a contingent-fee basis.
    However, NOVA recognizes there may be a practical problem of 
contingent fees in situations where the benefit the veteran is seeking 
may not be a monetary benefits such as a vocational benefit, an offset 
issue or a waiver of an overpayment. In these instances, it might be 
appropriate to permit a fee other than a contingent fee.
    Question 1b. Would the current authority of the U.S. Court of 
Appeals for Veterans' Claims and the Board of Veterans' Appeals to 
review the reasonableness of attorney fees provide adequate protection 
for veterans against being charged unreasonable fees?
    Answer. Under the present system, when an award of past due 
benefits is made at the Regional Office and there is an attorney fee 
contract, the Regional Office will make the initial decision regarding 
entitlement to a fee. If the veteran does not agree with that decision 
of the Regional Office he can file an appeal to the Board of Veterans' 
Appeals. In addition, the Veteran can ask the Board at any time to 
review a fee agreement for reasonableness directly. Thus, there are two 
separate avenues for the veteran to have a fee agreement reviewed. 
Finally, for cases filed in Court, the CAVC has the power to review a 
fee agreement on its own or on the motion of either party. For these 
reasons, NOVA believes the current system is adequate for reviewing fee 
agreements.
    Question 1c. What other measures could be taken to ensure only 
reasonable fees would be charged, particularly for services provided to 
veterans at the regional office?
    Answer. Answer not provided.
    Question 2. You testified that attorney representation throughout 
the VA adjudication and appeal process would help ensure that veterans 
receive all benefits to which they are entitled. On the other side of 
the coin, particularly considering the increasing number of claims 
being filed and the trend of an increasing number of claims involving 
numerous disabilities, would attorney representatives have an ethical 
obligation to counsel their clients against filing claims that may not 
be meritorious?
    Answer. The American Bar Association's Model Rules 1.1 regarding 
competence; 1.3 regarding diligence and 3.1 regarding meritorious and 
the parallel State provisions impose an ethical obligation upon an 
attorney to examine a claim for its merit and to counsel the client 
against filing a claim if it is frivolous and without merit. Moreover, 
as practical matter an attorney working on a contingent basis is going 
to counsel a veteran against filing a frivolous claim. Thus, the 
combined effect of the ethical obligation and the practical 
considerations of working on a contingent basis necessarily would mean 
a veteran's claim would be screened for merit.
    Question 3. You also recommended that Congress amend 38 U.S.C. 
Sec. 7105 to eliminate the requirement that a claimant submit a 
Substantive Appeal (or Form 9) in addition to filing a Notice of 
Disagreement (NOD) in order to perfect an appeal to the Board. Under 
current law, the filing on an NOD triggers certain actions by the 
regional office. Under the scenario that you have proposed, what means, 
if any, would VA have to determine if a claimant wishes to continue 
with an appeal to the Board after the VA has taken action in response 
to an NOD?
    Answer. Once an NOD is filed, the burden should not be on the 
veteran to show that he wants to continue the appeal. The burden should 
be on the VA to show that he does not want to appeal. Hence the case 
should be sent to the Board within some mandatory timeframe once the 
NOD is filed. If the veteran is satisfied with the action the VA has 
taken after the filing of the NOD, the VA could implement a procedure 
allowing the veteran to withdraw his appeal after filing the NOD. But 
any such procedure should permit the veteran to revoke his withdrawal 
within 1 year to ensure that any perceived withdrawal is truly 
voluntary.
                               __________
    Response to Written Questions Submitted by Hon. Larry E. Craig 
                            to Rick Surratt
    Questions 1a-1b. In the VA Office of Inspector General's May 19, 
2005, report, it was emphasized that the VA Schedule for Rating 
Disabilities is based on a 60-year-old model that does not reflect 
modern concepts of disability. If the disability system is not based on 
``modern concepts of disability,'' then on what is it based?
    If the disability system is outmoded, how do we know whether we are 
paying veterans enough, or too much, disability compensation?
    Answer. The VA Office of Inspector General (OIG) raised several 
issues in connection with its effort to identify the causes of 
substantial variations from State to State in the average annual 
compensation payments of veterans of those States. Although somewhat 
tangentially linked to the factors underlying the variances, that is, 
demographic variances and rating practice variances, the OIG raised 
questions as to whether the VA's Schedule for Rating Disabilities 
accords with ``modern concepts of disability.''
    Parroting the concerns raised by various other critics, OIG 
observed that the rating schedule is based on a 1945 model (the 1945 
edition of the rating schedule) that itself is founded on a concept of 
disability measurement that dates back to 1919 (average impairment of 
earning capacity). According to the view OIG adopted from others, the 
last major modification to the rating schedule occurred in 1945, when 
it was revised to reflect advances in medicine, science, and technology 
and to add new coding and indexing for disabilities. Although OIG 
acknowledged VA has, in the past few years, systematically revised most 
of the schedule to incorporate current medical terminology and revise 
the rating criteria to reflect advances in medicine, OIG stated ``these 
more recent revisions have not changed the basic relationship between 
disabilities and average earnings impairment established in the 1945 
rating schedule.'' The OIG cited a concern previously raised about the 
appropriateness of use of average impairment rather than the 
``individual veteran's specific impairment in earning capacity'' or 
``actual earnings or income'' as the basis for rating disabilities. 
Somewhat different from basing compensation on the individual veteran's 
actual earnings or income, the OIG repeated a familiar theme from at 
least one outside critic of the schedule that the ratings should be 
based on ``earnings-based estimates of economic impairment associated 
with specific service-connected disabilities.'' However, the OIG also 
cited a recommendation from another study that the rating schedule ``be 
revised based on factual data to ensure it reflected the average 
reduction in earning capacity.'' In short, the OIG cited a common 
complaint that the schedule needs ``major restructuring'' based on a 
variety of different views of what exactly is wrong with the current 
schedule.
    Though admittedly imperfect, the current rating schedule is the 
product of perhaps the most extensive, longstanding, and enduring 
experience in disability assessment by any agency or authority. 
According to statute, the schedule is based on what has proven to be 
the most practical and equitable standard for gradation of disability 
among military veterans with a wide diversity of vocational backgrounds 
and variations in impairment from diseases and injuries. It has been 
adjusted according to experience rather than in reaction to untested 
notions urged from time to time by outside critics who have no in-depth 
knowledge of the schedule or experience with disability evaluation.
    Although historical information indicates various provisions for 
benefits based on graded, or partial, disability date back to the Civil 
War period, the basic concept of today's disability rating schedule was 
established in the War Risk Insurance Act of October 6, 1917. Where 
prior provisions resulted in lack of uniformity, the new schedule was 
to employ an average impairments standard. Section 302 of the Act 
provided:
    A schedule of ratings of reductions in earning capacity from 
specific injuries or combinations of injuries of a permanent nature 
shall be adopted and applied by the bureau. Ratings may be as high as 
100 per centum. The ratings shall be based, as far as practicable, upon 
the average impairments of earning capacity resulting from such 
injuries in civil occupations and not upon the impairment in earning 
capacity in each individual case, so that there shall be no reduction 
in the rate of compensation for individual success in overcoming the 
handicap of permanent injury. The bureau shall from time to time re-
adjust this schedule of ratings in accordance with actual experience.
    This provision was modeled somewhat on the emerging workers' 
compensation program, which provided payments based on either 
individual loss of earnings due to disability or loss of earning 
capacity as a measure of presumptive need. It should be noted that the 
statute then, at it does today, referred to disability from 
``injuries'' and included no reference to diseases. See 38 U.S.C.A. 
Sec. 1155 (West 2002). This is perhaps because it was modeled on 
workers' compensation programs that had at that point not embraced 
coverage for occupational diseases. However, the Act provided that the 
term ``injury'' included disease.
    While the ``average impairments of earning capacity'' standard of 
the rating schedule authorized under the War Risk Insurance Act was 
based on medical assessments of disability, a rating schedule 
authorized by legislation enacted in June 1924 experimented with 
incorporation of occupational factors into disability ratings. Section 
202(4) of the World War Veterans' Act, 1924, provided that the ratings 
would be based, as far as practicable, upon the average impairments of 
earning capacity resulting from injuries in civil occupations ``similar 
to the occupation of the injured man at the time of enlistment and not 
upon the impairment in earning capacity in each individual case.'' 
Under this concept, the percentage ratings for the medical or 
functional impairments were modified by values representing 
occupational variants so that a disability at a given level would be 
rated differently for veterans with different pre-service occupational 
histories. Many veterans had no pre-service occupation, and the scheme 
proved impractical for a variety of other difficulties concerned with 
accurately classifying occupational characteristics and assessing the 
effect of mental and physical disabilities upon persons with these 
varying factors. Instead of grades of disability in multiples of 10 
percent, this schedule provided for ratings in multiples of 1 percent. 
Rather than improve upon the prior standard, this attempt to add 
precision added complexity, unforeseen problems, and unintended 
consequences. With the next version of the rating schedule, the scheme 
was abandoned, and VA reverted to the average person basis for ratings.
    With the first and second editions of the 1933 rating schedule, 
established under authority of Veterans' Regulation No. 3 and No. 3(a), 
the ratings were to be based, as far as practicable, upon average 
impairments in earning capacity. The first edition, issued in 
accordance with Veterans Regulation No. 3 (March 31, 1933), provided 
for five grades of disability, 10 percent, 25 percent, 50 percent, 75 
percent, and 100 percent. The second edition, issued in accordance with 
Veterans Regulation No. 3(a) (June 6, 1933), provided for 10 grades of 
disability, from 10 percent to 100 percent.
    Under the authority in Veterans Regulation No. 3(a), the VA 
Administrator issued in 1945 a readjustment of the 1933 rating schedule 
to be known as the 1945 edition. Though the ratings from the 1933 
schedule were reorganized and given new coding, many of the percentage 
ratings were the same or only slightly different from those in the 1933 
schedule. The authority for the rating schedule in Veterans Regulation 
No. 3(a) was later codified in statute without substantive change.
    In 1957, VA issued a reprint of the 1945 edition with all 
extensions (changes and additions) through January 16, 1957. With that 
publication, it was ``planned to readjust the schedule, page by page, 
or section by section, to incorporate the results of medical advances 
and the experience of the Veterans Administration.'' In his July 20, 
1971, report to Congress entitled Economic Validation of the Rating 
Schedule,'' the VA Administrator noted there had been 15 revisions 
since issuance of the 1957 Loose Leaf Edition of the schedule. The 
Administrator explained:
    It was left to the Administrator to determine what is meant by 
``the average impairments of earning capacity.'' Its meaning was 
developed within the Veterans' Administration as a result of studies 
and conferences undertaken by rating personnel, mostly medical, as well 
as physicians in the Department of Medicine and Surgery [now the 
Veterans Health Administration], and other VA offices. It can be said 
that the rating schedule's description of disability and its evaluation 
represents a distillate of informed opinion with many compromises among 
the views of the various consultants. Committee on Veterans' Affairs, 
VA Report, Economic Validation of the Rating Schedule 16 (Comm. Print 
No. 109 1971) [hereinafter ECVARS].
    Between 1971 and 1988, VA made changes to most of the individual 
sections dealing with the individual bodily systems. In 1988, the 
United States General Accounting Office, now the Government 
Accountability Office (GAO), found that VA needed to undertake a more 
comprehensive update of the medical criteria in the rating schedule. 
GAO's recommendations stated:
    To better ensure that the rating schedule serves as a practical 
tool in assigning uniform disability ratings to veterans, GAO 
recommends that the Administrator:
     Prepare a plan for a comprehensive review of the rating 
schedule and, using the results of the review, revise medical criteria 
accordingly.
     Implement a procedure for systematically reviewing the 
rating schedule to keep it up-to-date in the future.
    VA agreed to perform a methodical review and revision of the rating 
schedule by body system and agreed to establish a procedure for 
systematic review thereafter on an ongoing basis. As a result, the next 
major overhaul of the rating schedule began in 1991. VA developed a 
plan to review and revise the schedule section by section. Since then, 
VA has completed the laborious process through promulgation of final 
regulatory changes for most of the 15 body systems and has proposed 
rules outstanding for visual disabilities, leaving only one complete 
bodily system and part of two other systems to be addressed.
    It should be noted here, incidentally, that scientific advances in 
treatment do not necessarily call for revision of the rating schedule 
because scientific advances do not change the pathology and basic 
characteristics of the diseases. Such advances may improve therapies 
and simply mean that the symptoms are more responsive to treatment 
under some or most circumstances, in which case the veteran's 
disability should be rated lower under the existing criteria. Improved 
treatments do not change the range of possible degrees of disability or 
remove the possibility that other cases will still be encountered that 
meet the criteria for the ratings reflecting poorer responses to 
treatment. However, improved treatment methods and therapies do often 
shorten convalescent periods, and VA has adjusted the rating schedule 
to shorten the time for which it pays post-surgical and convalescent 
ratings.
    With the publication of each revision of sections of the rating 
schedule in the Federal Register, VA explained that it was updating 
that portion of the schedule to ensure that it uses current medical 
terminology, unambiguous criteria, and that it reflects medical 
advances that have occurred since the last review. Despite the fact 
that VA followed GAO's recommendation, GAO now urges that VA develop an 
earnings-based rating schedule, and others who do not understand the 
issue have readily subscribed to the superficial view and mistaken 
assumption that ``average impairments of earning capacity'' means 
average wage loss attributable to disability.
    Contrary to OIG's assertion that today's rating schedule is based 
on a 60-year-old model, the rating schedule is actually based on a much 
older standard for disability measure, that is, average impairment of 
earning capacity, but its longevity does not mean the standard no 
longer has utility. Indeed, it demonstrates to the contrary. Experience 
has shown this time-tested standard to be the best available for fair 
and practical evaluation of disability. Moreover, it seems clear that 
Congress intended that VA adopt a schedule of ratings based on medical 
judgments as to the average effect on earnings capacity that can be 
expected for given injuries or diseases existing at various degrees, 
and never contemplated that it be based on individual or average loss 
of earnings. Several points support this view as to Congressional 
intent, and practicality, fairness, and experience demonstrate that 
this congressional intent continues to be the best solution to the 
assessment of veterans' disabilities.
    In 1917, when Congress first provided for a rating schedule founded 
on average impairment in earnings capacity, there was no data then 
available to base the ratings on actual average wage loss attributable 
to the numerous diseases and injuries at various grades. There was no 
such system of gradation under which disabilities in society could be 
classified and tabulated, and thus there was no means to correlate 
various disabilities at various degrees of severity with wage levels:
    There were few workmen's compensation laws in existence and almost 
no data based on scientific analysis and factual studies. There was 
little suitable material for guidance and training of those who were to 
adjudicate cases. Lists of medical diseases upon which evaluation and 
standards could be established and incorporated into the schedule were 
non-existent. There were no sound scientific data available to measure 
average impairments of earning capacity resulting from injuries in 
civilian occupations.
    ECVARS, at 11.--Because this authority for the rating schedule was 
based on the ``social insurance'' principles of early workers' 
compensation law, Congress was surely aware of the paucity of data of 
this type, and thus did not intend that the many grades and 
combinations of disabilities be based on wage loss comparisons between 
disabled veterans and non-disabled workers.
    Perhaps the language Congress adopted or adapted from workers' 
compensation programs also reveal intent. Congress' choice of average 
``impairments'' of earning capacity may be revealing. ``Impairment'' is 
``[t]he fact or state of being damaged, weakened, or diminished.'' 
Black's Law Dictionary 754 (7th ed. 1999). When something is 
``impaired,'' it is ``[d]iminished, damaged, or weakened.'' The 
American Heritage Dictionary of the English Language 878 (4th ed. 
2000). In workers' compensation law, impairment is often used to refer 
to an abstract medical measure of disability rather than a concrete 
wage loss measure of disability: ``Unlike disability, impairment 
usually refers to medical function and not to earning capacity. In some 
States, impairment is a purely medical condition reflecting any 
anatomical or functional abnormality or loss, and may be either 
temporary or permanent, industrial or non-industrial.'' Mod Work Comp 
Sec. 200:2.
    Workers' compensation benefits are either based on a ``medical-
loss'' or ``wage-loss'' theory: ``Disability benefits are designed to 
provide compensation for the loss of earnings or earning power, and 
they are usually determined on the basis of either medical loss or wage 
loss theories.'' Jack B. Hood, Benjamin A. Hardy, Jr. & Harold S. 
Lewis, Jr., Workers' Compensation and Employee Protection Laws 85 (4th 
ed. 2005). ``A medical loss theory, dictates, for example, that in the 
case of one who has lost an arm, compensation is required for the loss 
of that limb regardless of whether there has been an adverse impact 
upon earning capacity or lost wages. On the other hand, the wage loss 
theory is based upon the idea that a person should be compensated for 
loss of wages. . . .'' Id. 29.
    Workers' compensation programs that pay benefits under a medical 
loss theory often do so in accordance with schedules. ``[T]he award of 
scheduled loss is exclusive, payable on the basis of a loss of physical 
function, and is payable regardless of whether the employee has 
suffered a loss in earning capacity.'' Mod Work Comp at Sec. 200:11.
    A workers' compensation treatise explains the principle as set 
forth by the Supreme Court of the United States:
    Scheduled benefits are payable without proof of actual wage loss or 
impairment of earning capacity. In effect, the schedule provides a 
conclusive presumption that a worker will sustain wage loss that 
justifies compensation in the prescribed amount. The Supreme Court 
explained the rationale underlying the use of schedules as follows: 
``The lump-sum awards for total and permanent disability under [the 
Alaska] Compensation Act ignore wage losses. Whatever the employee may 
have made before, whatever his wages may be after the injury, the award 
is the same. To that extent it is an arbitrary amount. But it is the 
expression of a legislative judgment, that on the average there has 
been a degree of impairment, and whatever may be the fact in a 
particular case, the lump-sum should be paid without more.'' Alaska 
Industrial Board v. Chugach Electric Ass'n, Inc., 356 U.S. 320, 323-24 
(1958). Joseph W. Little, Thomas A. Eaton & Gary R. Smith, Workers' 
Compensation (4th ed. 1999).
    With VA's rating schedule, there is a legislative judgment of what 
disability rating should apply, and Congress delegated to VA the 
authority to make that legislative judgment.
    Such rating schedules are a practical solution to disability 
assessment. With regard to Vermont's scheduled loss basis for 
compensation, the Supreme Court of Vermont explained the principle 
thoroughly:
    [P]ermanent disability benefits are calculated solely on the basis 
of physical impairment: ``(The permanent disability) statute has 
arbitrarily fixed the amount of compensation to be paid for scheduled 
specific injuries regardless of loss of present earning power.''
    The claimant challenges the validity of these different standards 
set forth in Vermont case law. He asserts that permanent disability, 
like temporary disability, should be evaluated by reference to any 
factor which restricts capacity for work. In support of this position, 
he advances several arguments. First, he contends that the Act's use of 
the word ``disability'' connotes more than physical impairment, thereby 
requiring evaluation of ability to work. Second, he asserts that by 
allowing compensation for unscheduled injuries, see 21 V.S.A. 
Sec. Sec. 644(b), 648(20), the Act sanctions consideration of factors 
other than physical injury. Third, he argues that the purpose of the 
statute is to compensate for lost wages, which requires consideration 
of capacity for work. Thus, he concludes that the Commissioner erred in 
failing to consider the claimant's ability to work, and in relying 
solely on physical impairment in setting compensation.
    The claimant's arguments do not persuade us to reject our 
precedent. Earning capacity is significant to the Workmen's 
Compensation Act, but it performs a far different function than 
envisioned by the claimant.
    The claimant correctly assigns protection against wage loss as one 
of the Act's purposes. The Act, however, also seeks to establish an 
expedient, efficient remedy for injured workers. Simplifying the 
elements of recovery is the Act's mechanism for achieving efficiency. 
To be entitled to benefits, a claimant need only establish that he 
suffered ``a personal injury by accident arising out of and in the 
course of his employment by an employer subject to (the Act).'' 21 
V.SA. Sec. 618. . . . Because resolution of these issues on a case by 
case basis would impede the process, thereby delaying awards to needy 
beneficiaries, the legislature has chosen a ``scheduled benefits'' 
system. The rate of compensation for listed injuries has been 
conclusively determined in the Act. See 21 V.S.A. Sec. Sec. 644, 648. 
The system still protects against wage loss, but it fulfills this aim 
by awarding permanent disability benefits on the basis of physical 
impairment as a means to insure against wage loss. Professor Larson 
explains how a scheduled benefits system, such as Vermont's, insures 
against wage loss:
    (Exclusion of individual wage loss evidence) is not, however, to be 
interpreted as an erratic deviation from the underlying principle of 
compensation law--that benefits relate to loss of earning capacity and 
not to physical injury as such. The basic theory remains the same; the 
only difference is that the effect on earning capacity is a 
conclusively presumed one, instead of a specifically proved one based 
on the individual's actual wage-loss experience. A. Larson, Workmen's 
Compensation Laws 58.11, at 10-173 to 174 (1981) (footnotes omitted).
    The yardstick is general, not particular. Bishop v. Town of Barre, 
140 Vt. 564, 442 A.2d 50 (1982) (citations omitted).
    Obviously, VA could not use a wage-loss system for compensating 
veterans to whom it awards compensation upon military discharge, and 
not following civilian employment in many instances. Workers' 
compensation programs use schedules that are based on medical judgments 
as to impairment in earning capacity, and VA's rating schedule is not 
based on an outdated concept. Suggestions that it is are based on 
misconceptions.
    In an adjudication system as large as VA's, simplicity is 
essential. The more complex schedule that factors in occupational 
variants or individual circumstances have proven counterproductive:
    For reasons similar to those dictating the use of schedules, 
experience indicates the desirability of keeping them as simple as 
possible. The admirable urge to build into the schedule a maximum 
amount of individual equity has at different times caused some States 
and the veterans' program to adopt multifactor schedules which vary 
awards for similar injuries in accordance with the disabled person's 
occupation, age, or other factors.
    The trend has been sharply away from schedules of that type. Today 
only California, among workmen's compensation jurisdictions, maintains 
such a schedule, and the Veterans' Administration abandoned it some 
years ago. Yet proposals keep recurring for the reintroduction of 
occupational variation in disability rating schedules. The logic of the 
argument for such variations is attractive. The experience--that of 
California has been described in detail in this paper--does not, 
however, support the logic.
    A persuasive case for occupational or other variations must succeed 
in explaining away not only the California experience but also the 
unsuccessful attempt of the Veterans' Administration to adopt the 
principle.
    The President's Commission on Veterans' Pensions (Bradley 
Commission), Compensation for Service-Connected Disabilities: A General 
Analysis of Veterans' and Military Disability Benefits, Mortality 
Rates, Disability Standards in Federal Programs, Workmen's 
Compensation, and Rehabilitation, Staff Report Number VIII, Part A, 
H.R. Comm. Print No. 84-281, at 243 (1956) [hereinafter Bradley 
Commission Report No. VIII].
    In its quest for the most simple, practical, and equitable rating 
schedule possible, Congress also apparently chose to base the ratings 
on average impairment in earning ``capacity'' rather that average loss 
of earnings: ``Actual earnings are a relatively concrete quantity. . . 
. Earning capacity, however, is a more theoretical concept. It 
obviously does not mean actual earnings, since the legislature 
deliberately chose a different phrase for the post-injury earnings 
factor.'' Joseph W. Little, Thomas A. Eaton & Gary R. Smith, supra 375.
    Certainly, it would be unwise to adopt the suggestion by some, as 
cited by the OIG, that veterans' disabilities should be compensated 
based on individual impairment in earning capacity:
    Despite the fact that no two disabilities are likely to be 
precisely alike, influencing the future of the disabled persons in 
exactly the same fashion, a mass compensation program cannot be 
administered by attempting independent judgment in each case on the 
particular and special facts which may be involved. A social insurance 
program cannot be turned into a judicial system.
    To achieve administrative efficacy, social insurance relies on the 
``magic of averages'' to arrive at overall equity and social justice. 
This means inescapably that one individual may get somewhat more and 
another somewhat less than precise individual justice would indicate. 
Bradley Commission Report No. VIII, at 242.
    Neither would it be fair or practical to base compensation on 
individual earnings or income. Again, for those veterans awarded 
compensation upon military discharge, there would be no civilian pre-
injury wage for comparison with post-injury wages. Compensation, by 
definition, is not a needs-based gratuity, and the level of 
compensation should in no way be based on income, earned or otherwise. 
A veteran who, despite service-connected paralysis and confinement to a 
wheelchair, works and earns wages higher than the average wage of non-
disabled counterparts should not be denied compensation on that basis. 
Moreover, some critics who call for a new rating schedule do so in the 
name of improved consistency, but there would be no consistency if 
veterans were compensated based on individual earnings or income. In 
addition, there would be no fairness in paying a veteran who overcomes 
disability less than another veteran with the same disability who has 
been unable to overcome it. VA's rating schedule is built on the 
principle that veterans are to be compensated as uniformly as possible 
with no penalty for individual ability to overcome disability.
    The history shows that, though those formulating and updating the 
rating schedule may have taken some general account or notice of 
changes in the American workplace, it is fairly clear that, other than 
the quickly abandoned rating schedule authorized in by the World War 
Veterans' Act of 1924, the ratings were not founded on any average 
among the range of mental, physical, educational, and skill 
requirements of jobs existing in the national marketplace. Disability 
grading founded on earnings-based estimates of the effects of injuries 
and diseases would be unfair to veterans because such rating criteria 
would ignore the diminishment of quality of life and shortened life 
expectancy from disability. Though loss of earning capacity may be the 
primary basis of disability ratings, it has been recognized, and it is 
particularly true in today's society, that disability adversely affects 
veterans in other ways that cannot and should not be ignored. The 
Bradley Commission observed that there are other compensable elements 
of disability that should be recognized, such as loss of physical 
integrity, loss of physical vitality, pain and suffering, social 
inadaptability, and shortened life expectancy. Bradley Commission 
Report No. VIII, at 134-35; ECVARS, at 16. We believe any attempt to 
base ratings on wage comparisons between disabled veterans and non-
disabled persons would present many problems and inequities, which we 
will not belabor here given the length of the discussion already 
required to explain our answer to the question presented to us.
    The recommendations cited by OIG are based on overly simplistic 
views, faulty assumptions, and misunderstandings about the principles 
of the VA rating schedule and ignore issues relating to the equitable 
and practical bases for those principles. The proponents of radical 
change themselves have no expertise in formulating disability 
assessment models. Theirs is a solution in search of a problem.
    Though there are areas in which VA could improve its Schedule for 
Rating Disabilities, it is based on contemporary concepts of 
disability; it is not outmoded. We know of no better model in other 
disability programs, and in recent testimony before the Veterans' 
Disability Benefits Commission, GAO conceded that it knew of no better 
model. Congress has wisely rejected prior calls to change the basis of 
VA's rating schedule and should continue to do so.
    Question 2. The panelists joining you on our second panel during 
the hearing suggested that some significant changes in the system 
should be considered in order to improve its performance. Do you have 
any response to their suggestions?
    Answer. Yes, I think the suggestions that I did not have an 
opportunity to address or to address thoroughly during the hearing 
merit a response.
    Judge Kenneth B. Kramer presented three recommendations:
     revision of section 5103A(d)(2)(B) of title 38, United 
States Code, to make it clear that VA has an obligation to provide an 
examination or obtain a medical opinion to resolve the question as to 
whether a current disability is causally linked to a disability or 
event of service origin;
     stationing of administrative law judges (ALJs) at VA 
regional benefit offices to make the final decision on a claim for the 
VA agency of original jurisdiction; and
     removal of the jurisdiction of the United States Court of 
Appeals for the Federal Circuit to review decisions of the United 
States Court of Veterans' Claims.
    The DAV has no objection to Judge Kramer's first recommendation. 
From our experience, any problems with section 5103A(d)(2)(B) are more 
with VA practice than with the language of the statute itself. We 
believe VA requires evidence of a link between current disability and 
military service when such evidence should not be required as matter of 
law, and we believe VA may well shirk its responsibility to obtain 
evidence on the point when such evidence is necessary for resolution of 
the claim. Evidence of a connection between current disability and 
military service is not required under VA regulations when the veteran 
now claims service connection for an injury in service that left 
permanent residuals or claims service connection for a chronic disease 
contracted or aggravated during service in the Armed Forces. See 38 CFR 
Sec. 3.303(b) (2004). However, where there is a valid question as to 
whether current residuals of injury are attributable to injury during 
service or where there is a valid question as to whether current 
disease is related to disease in service because the disease in service 
was not shown by the military medical record to be chronic, expert 
opinion is required to resolve the question. Actually, it was a line of 
erroneous decisions by the Court that imposed a three-part test for 
service connection, contrary to Sec. 3.303(b), that caused VA to 
deviate from these simple principles and longstanding rules.
    While having ALJs as the last decisionmakers at the VA field office 
level might mean that the record development and decisions would be 
better at that level, and thereby avoid some appellate workload and 
many Board of Veterans' Appeals remands, we suspect that the cost would 
outweigh the benefit.
    Under current law, the Court of Appeals for the Federal Circuit has 
jurisdiction to review decisions of the Court of Appeals for Veterans' 
Claims on legal challenges but not on questions of fact. That review 
has proven beneficial and has resulted in reversal--and affirmance--of 
decisions of the Court of Appeals for Veterans' Claims on important 
points of law. In some instances where the Court of Appeals for 
Veterans' Claims chose, in its decision, to sidestep questions of law 
raised, the Court of Appeals for the Federal Circuit decided the matter 
and resolved the question. VA cannot appeal its own decision to the 
Court of Appeals for Veterans' Claims, but, once that Court makes a 
decision on a point of law in connection with an appeal brought by a 
veteran, VA should have some recourse if it believes the legal point to 
have been wrongly decided. Without Federal Circuit jurisdiction, VA 
would have no right of appeal and would be left to petition for review 
by the Supreme Court of the United States where review is granted in 
only a fraction of the cases in which it is sought. The premise for 
removing Federal Circuit jurisdiction was that appeals there add to the 
already protracted process. However, appeals to the Federal Circuit are 
not responsible for the length of time a case spends in the VA's 
administrative process, and in the rare case a decision by the Federal 
Circuit brings the case back within the administrative process, that is 
at the election of the veteran and is preferable to an absence of 
recourse beyond the Court of Appeals for Veterans' Claims. The DAV 
opposes this recommendation.
    Mr. Robert Chisholm, representing the National Organization of 
Veterans Advocates, presented five recommendations:
     imposition of mandatory timeframes for each step in the VA 
adjudication process;
     elimination of the requirement that the claimant file two 
documents to obtain appellate review, the ``notice of disagreement'' 
and the ``substantive appeal'';
     increase in staff at the regional office level, 
particularly decision-review officers;
     replacement of the Board of Veterans' Appeals (BVA) with 
ALJs, or alternatively, decentralization of BVA by placing the Board 
members at the regional offices; and
     enactment of legislation to permit attorneys to charge 
veterans for assistance in filing claims and representation at the 
regional office level
    Frustration with delays have prompted recommendations from the 
veterans' community that Congress impose mandatory time limits upon VA. 
The recommendation sounds attractive, but its practicality is 
questionable. The DAV believes the better solution is sufficient 
resources and the reforms we have recommended to improve quality and 
timeliness.
    We have no objection to changing the process to alleviate the need 
for both a notice of disagreement and a substantive appeal. However, we 
believe Mr. Chisholm's recommendation is from the perspective of an 
attorney and does not consider the situation in which a claimant is 
unrepresented. A notice of disagreement, like a notice of appeal, 
simply initiates the appellate process. VA then provides the appellant 
with a statement of the case to explain the reasons for its decision. 
With a complete understanding of the bases for the decision, the 
appellant then files a substantive appeal to set forth his or her 
specific arguments as to where VA erred. Occasionally, VA discovers its 
error when it receives the notice of disagreement alleviating the need 
for a statement of the case and a substantive appeal. Where a claimant 
is represented, elimination of one step in the process would perhaps be 
without adverse consequences.
    The DAV agrees that VA needs more adjudicators. We also agree that, 
on the whole, the decision review officer program has proven 
successful.
    The DAV opposes Mr. Chisholm's recommendation to replace BVA with 
ALJs, like those of the Social Security Administration, who would be 
stationed at VA regional offices, or, in the alternative, to 
decentralize BVA and station its members in regional offices. From the 
standpoint of an attorney whose practice is not in Washington, D.C., it 
would be more convenient to have the appellate authority located at the 
regional office, but it would not be beneficial for veterans or VA. The 
resolution adopted by DAV's members explain the essential reasons we 
oppose decentralization:
     Resolution No. 182.--Oppose Regional Dispersion of the Board 
                          of Veterans' Appeals
    WHEREAS, veterans and other claimants for veterans' benefits may 
appeal erroneous decisions of the various and geographically dispersed 
benefit offices and medical facilities of the Department of Veterans 
Affairs (VA); and
    WHEREAS, inaccuracy and lack of uniformity are pervasive among the 
claims decisions of the many VA field offices; and
    WHEREAS, one board, the Board of Veterans' Appeals situated 
adjacent to VA's central office and policymaking center in Washington, 
D.C., hears all appeals; and
    WHEREAS, appellants, Board members, and taxpayers derive numerous 
benefits from an appellate board housed in one centralized location, 
some of the more obvious of which are:
     availability of the collective expertise of the entire 
board;
     professional interaction and association among Board 
members and staff;
     shared and uniform training;
     common and shared goals and responsibilities;
     economies of scale from pooled resources and the most 
efficient workload distribution, with the flexibility and capacity to 
readjust the workload as necessary between members and support staff;
     a positive environment and employee incentives for 
developing creative solutions and innovations to meet and overcome the 
challenges inherent in a system of mass adjudication of claims;
     more efficient and effective centralized case management 
and storage;
     more effective centralized board administration and hands-
on employee oversight; and
    WHEREAS, Congress created the Board of Veterans' Appeals after 
repeated failed experiments with various configurations of regional 
appellate panels that were plagued by persistent inefficiencies and 
problems and were proven impractical and poorly suited to properly 
dispose of veterans' appeals; and
    WHEREAS, indications are that consideration is being given within 
certain quarters of VA to dismember the board and scatter its 
decisionmakers among the VA field offices or among various regions of 
the Nation; and
    WHEREAS, such regional reorganization of the Board would be 
extremely unwise, wholly unwarranted, and not in the best interests of 
veterans or taxpayers; NOW
    THEREFORE BE IT RESOLVED, that the Disabled American Veterans in 
National Convention, assembled in Reno, Nevada, July 31-August 3, 2004, 
categorically opposes any decentralization of the Board of Veterans' 
Appeals.
    We also see no benefit in replacing Board members with ALJs who 
would be stationed in regional offices. ALJs perform adjudications 
under the more formal procedures of the Administrative Procedure Act. 
Social Security ALJs are not located in the same offices as the initial 
decisionmakers, and we believe locating appellate personnel with the 
adjudicators whose decisions they will review could be detrimental.
    The DAV opposes Mr. Chisholm's recommendation to amend the law to 
permit attorneys to charge claimants for claims assistance and 
representation at the regional office level. As you know, current law 
does not bar attorney representation in the initial administrative 
proceedings before VA, but it does prohibit an attorney from charging 
for that representation. On behalf of the National Organization of 
Veterans' Advocates, Mr. Chisholm seeks amendment of section 5904 of 
title 38, United States Code, to remove the prohibition against 
charging veterans for claims counseling, assistance in filing benefit 
applications, and representation in benefit claims at the regional 
office level.
    Section 5904(a) provides that the Secretary of Veterans' Affairs 
may recognize attorneys for the preparation, presentation, and 
prosecution of claims. However, subsection (c)(1) of that section 
provides ``a fee may not be charged, allowed, or paid for services of 
agents or attorneys with respect to services provided before the date 
on which the Board of Veterans' Appeals first makes a final decision in 
the case.''
    The change NOVA seeks would not be in the best interests of 
veterans for several reasons, and would be detrimental to the 
administrative processes. The principal reason for the DAV's opposition 
is founded in the public policy underlying the current prohibition 
against charging veterans for claims assistance. Reviewing the history 
of pensions provided to veterans, the Supreme Court of the United 
States observed the enduring principle that this monetary assistance 
should go solely for the benefit of the veterans for which they were 
provided:
    ``Enough appears in these references to the legislation of the 
Congress under the Constitution to show that throughout the entire 
period since its adoption it has been the unchallenged practice of the 
Legislative Department of the Government, with the sanction of every 
President, including the Father of the Country, to pass laws to prevent 
the diversion of pension money from inuring solely to the use and 
benefit of those to whom the pensions are granted.'' United States v. 
Hall, 98 U.S. 343, 354 (1879).
    ``The Government interest, which has been articulated in 
congressional debates since the fee limitation was first enacted in 
1862 during the Civil War, has been this: that the system for 
administering benefits should be managed in a sufficiently informal way 
that there should be no need for the employment of an attorney to 
obtain benefits to which a claimant was entitled, so that the claimant 
would receive the entirety of the award without having to divide it 
with a lawyer.'' Walters v. National Ass'n of Radiation Survivors, 473 
U.S. 305, 321 (1985).
    Veterans and their dependents should not have to resort to hiring 
and paying lawyers to obtain veterans' benefits to which they are 
rightfully entitled. Through a variety of social programs, our Nation 
unselfishly provides benefits to assist citizens disadvantaged for one 
reason or another. Veterans' benefits are more than a matter of relief 
provided out of generosity. Because veterans make special sacrifices, 
subject themselves to extraordinary risks, and bear unusual burdens for 
the benefit of the rest of us, and because we owe our very existence as 
a Nation to our veterans, they earn special rights and special 
treatment. Veterans, who fought for our country, should never have to 
fight our Government to get the benefits our grateful citizens have 
provided as a reward for veterans' sacrifices and service. It is 
intended that these benefits be provided with a minimum of difficulty 
for the veteran claiming them. Veterans are therefore accorded a 
privileged status and are due more personal assistance from VA than 
claimants receive when seeking benefits from other Government sources. 
It is important, we believe, to remain mindful that veterans obtain 
their benefits through an informal, nonadversarial, and benevolent 
claims process, not a litigation process. The fundamental distinctions 
between the VA process and litigation reflect a calculated 
congressional intent and design to permit veterans to receive all the 
benefits they are due without any necessity to hire and pay lawyers.
    The nature and purpose of the distinctions between the VA process 
and other forums are well known and understood by those who are 
familiar with veterans' benefits law. Generally, veterans have the 
burden of proof, but, in the VA context, that only connotes the measure 
of evidence that will or will not warrant a grant of the benefits 
sought. It merely means VA cannot award benefits without the existence 
of evidence to reasonably confirm the veteran is entitled. Its effect 
is to prevent the burden from being put on VA to disprove entitlement 
when no affirmative evidence exists to show entitlement. If the burden 
is not met, it is the veteran that suffers the consequences in that the 
claim fails.
    The difference between the meaning of burden of proof for veterans 
and what burden of proof connotes in the traditional usage is much more 
than an insignificant subtlety. In its broadest traditional sense, the 
term includes (1) the obligation to fill the void by physically 
producing enough evidence to demonstrate the issue warrants formal 
consideration and (2) by producing enough evidence to convince the fact 
finder of the truth of the claim. These two elements of the burden of 
proof are known respectively as the ``burden of production'' and the 
``burden of persuasion.'' In a judicial proceeding, if the party 
asserting a claim fails to produce enough evidence to even suggest a 
valid claim, the matter may be summarily decided against him or her 
without necessity of full consideration of the merits. If the party's 
evidence is sufficient to meet the burden of production but 
insufficient to convince the decisionmaker of the truth of the facts 
alleged, the party loses on the merits.
    In judicial proceedings, each party must discover and physically 
present to the court his or her own evidence. It is not the court's 
place, nor proper role, to discover and obtain evidence for either of 
the parties or itself, because the court must be impartial and 
disinterested. Thus, in judicial proceedings, the burden of proof 
includes both the mechanical aspect of the duty of evidence production 
and the standard of persuasion upon the party having the burden of 
proof. The burden of proof in the traditional usage entails much more 
than is required of veterans seeking benefits.
    Under a proper interpretation and application of VA law, the 
veteran need only claim entitlement to a benefit, supply VA with the 
basic information necessary to confirm veteran status, and inform VA of 
the pertinent circumstances on which entitlement is claimed and sources 
of evidence that will support the claim. VA has the duty to inform the 
veteran of what facts and evidence are pertinent so the veteran can in 
turn help VA identify sources of evidence. VA has the duty to assist 
the veteran in obtaining available evidence. As such, the veteran has 
no burden of production. For the veteran, having the burden of proof 
simply means that it is he or she that bears the risk of nonpersuasion 
and stands to lose if the evidence is insufficient to convince the 
adjudicator of entitlement.
    Two more aspects of the VA process that fundamentally distinguish 
it from litigation and other administrative proceedings are the 
formalities and the obligations upon the parties. In court proceedings, 
the party must specify the precise legal grounds for the claim and know 
the proper venue, jurisdiction, and legal authorities on which the 
action rests. The parties must carefully negotiate a structured process 
governed by extensive formal and complex procedural rules filled with 
pitfalls and obstacles. The assistance of attorneys is essential. In 
judicial or other administrative proceedings, professional legal advice 
is usually required even before an action is brought; in the VA 
process, its employees counsel veterans on the bases of eligibility and 
their potential entitlement to the various benefits. VA will assist a 
veteran in completing and filing the relatively informal application 
for the benefit sought. VA personnel determine which activity has 
jurisdiction and direct the claim to the proper location. VA takes the 
initiative to advance the claim forward through the appropriate 
procedural steps. VA will inquire of the veteran if additional 
information is needed and will advise him or her of any necessity for 
additional evidence, again assisting in obtaining it if the veteran 
desires. Otherwise, the matter is completely in VA's hands once the 
claim is filed, and the veteran has no responsibility to take any 
further action to prosecute it. Congress placed the duty on VA to 
ensure all alternative theories of entitlement are exhausted and all 
laws, regulations, and other legal authorities pertinent to the case 
are considered and applied.
    Theoretically, because it is ultimately VA's duty to ensure all 
pertinent law is correctly applied, a veteran should have the same 
result with good representation, bad representation, or no 
representation. We all know, nonetheless, that no legal system is 
perfect, and veterans service organization representation is therefore 
advisable so errors can be discovered, but that does not relieve VA of 
the ultimate duty to ensure that all law is properly applied and all 
legal theories of entitlement are explored and considered.
    Therefore, it is the Government's responsibility to ensure that 
veterans are given every reasonable consideration and awarded every 
benefit to which they can be shown entitled. To accomplish that, we 
must have an agency that is fully devoted to serving veterans. The 
agency that serves veterans must do so with a sense of gratitude and 
with a duty to help rather than hinder veterans seeking benefits. It 
would be inconsistent with our indebtedness to veterans, our deep sense 
of gratitude, and the special honor we accord veterans to make them 
feel like their claims are unwelcome, require them to fight for their 
benefits, or even to require them to deal with a burdensome process. It 
would be shameful if a veteran seeking disability compensation for war 
wounds, for example, was confronted by a passive, indifferent, 
resistant, or contentious bureaucracy and was expected to have to pay a 
lawyer to get what was due from the Government. We firmly believe it 
would be inappropriate for us to condone a situation in which lawyers 
were needed to obtain veterans' benefits. We believe it would be 
equally inappropriate for us to agree to allow lawyers to interject 
themselves into the claims process so they could charge veterans for 
assistance in obtaining benefits.
    On the issue of the inappropriateness and lack of need of attorney 
representation in the initial administrative proceedings, our view from 
a practical and fairness standpoint, is similar to the view of 
Congress:

          ``There would seem to be no need for the assistance of an 
        attorney in order to initiate the claims process by completing 
        and filing an application. Moreover, even if the initial 
        decision is adverse, the Committee believes that it may be 
        unnecessary for a claimant to incur the substantial expense for 
        attorney representation that may not be involved in appealing 
        the case for the first time to the BVA. The claimant may well 
        prevail, as many claimants currently do, without legal 
        representation when the case is first before BVA.'' S. Rep. No. 
        100-418, at 63-64 (1988).

    Obviously, no benefits delivery system can be perfect. Admittedly, 
VA has fallen far short of serving veterans in the manner intended. VA 
sometimes denies veterans' claims erroneously, even arbitrarily. 
Veterans sometimes do have to fight an aloof bureaucracy to obtain what 
they are clearly due. However, if we agreed to permit attorneys to 
charge veterans fees for claims assistance, that would be an 
abandonment of the effort to force VA to reform and to force the system 
to work as intended. It would be viewed as a concession that the system 
cannot be made to fully work for veterans. With that concession, all 
efforts by Congress to force VA to perform as it was intended would 
likely cease. There would likely be an acceptance of circumstances and 
a system in which it was expected that veterans would have to pay 
lawyers and fight to obtain their benefits. VA would no longer grant 
benefits without being prodded to do so. Veterans would come to be 
treated as ordinary litigants rather than a special group entitled to 
special treatment.
    As we have already experienced somewhat from judicial review and 
involvement of lawyers in that connection, the informal pro-veteran 
process would gradually evolve into a formal, legalistic, and 
adversarial one. If that were ever to occur, the probable result would 
be an increase in money spent on administration because of the back and 
forth that would take place between lawyers and VA on cases. In 
addition, VA would quite probably have to devote a substantial amount 
of its scarce resources--including a whole legion of employees--to the 
review of attorneys' fee agreements. The result would be increased 
administrative costs, perhaps being paid for by a reduction in benefits 
elsewhere, and more benefits diverted away from the intended 
beneficiaries into the pockets of attorneys and agents. Agreeing to 
that would constitute an abandonment of our responsibility to work for 
the best interests of veterans.
    Our position is one based entirely on the goal of preserving the 
special status veterans enjoy and promoting sound public policy. 
Veterans service organizations have nurtured the system from its 
inception. We have an investment in and appreciation for the system 
that attorneys simply do not have. That proprietary interest in the 
system ensures that, though we will aggressively and fully prosecute 
veterans' claims, we will not do so blindly and with total disregard of 
the consequences for the system just to gain some perceived advantage 
for an individual claimant. On the other hand, lawyers handling 
individual claims will more likely ``hit and run,'' and possibly be 
more inclined to resort to tactics against VA that one might typically 
employ in adversarial proceeding to intimidate, overwhelm, or wear down 
an opponent. It would be difficult to criticize such an approach when 
it is billed as zealous representation. The open VA procedures designed 
for more gentle, gracious, and paternalistic dealings with claimants 
would probably have to be replaced with formal safeguards and 
restrictive rules to define prohibited practices and protect VA against 
such methods by zealous representatives. Veterans would lose the 
special considerations they are now accorded and lose rather than gain 
procedural advantages. Ultimately, it would be a ``lose-lose'' 
situation. The Court recognized the probable adverse effects in 
National Ass'n of Radiation Survivors:
    There can be little doubt that invalidation of the fee limitation 
would seriously frustrate the oft-repeated congressional purpose for 
enacting it. Attorneys would be freely employable by claimants to 
veterans' benefits, and the claimant would as a result end up paying 
part of the award, or its equivalent, to an attorney. But this would 
not be the only consequence of striking down the fee limitation that 
would be deleterious to the congressional plan.
    A necessary concomitant of Congress' desire that a veteran not need 
a representative to assist him in making his claim was that the system 
should be as informal and nonadversarial as possible. . . . The regular 
introduction of lawyers into the proceedings would be quite unlikely to 
further this goal. Describing the prospective impact of lawyers in 
probation revocation proceedings, we said in Gagnon v. Scarpelli, 411 
U.S. 778, 787-788, 93 S.Ct. 1756, 1762, 36 L.E.d.2d 656 (1973):

    ``The introduction of counsel into a revocation proceeding will 
alter significantly the nature of the proceeding. If counsel is 
provided for the probationer or parolee, the State in turn will 
normally provide its own counsel; lawyers, by training and disposition, 
are advocates and bound by professional duty to present all available 
evidence and arguments in support of their clients' positions and to 
contest with vigor all adverse evidence and views. The role of the 
hearing body itself . . . may become more akin to that of a judge at a 
trial, and less attuned to the rehabilitative needs of the individual. 
. . . Certainly, the decisionmaking process will be prolonged, and the 
financial cost to the State--for appointed counsel, . . . a longer 
record, and the possibility of judicial review--will not be 
insubstantial.''
    We similarly noted in Wolff v. McDonnell, 418 U.S. 539, 570, 94 
S.Ct. 2963, 2981, 41 L.Ed.2d 935 (1974), that the use of counsel in 
prison disciplinary proceedings would ``inevitably give the proceedings 
a more adversary cast. . . .''
    Knowledgeable and thoughtful observers have made the same point in 
other language:

          ``To be sure, counsel can often perform useful functions even 
        in welfare cases or other instances of mass justice; they may 
        bring out facts ignored by or unknown to the authorities, or 
        help to work out satisfactory compromises. But this is only one 
        side of the coin. Under our adversary system the role of 
        counsel is not to make sure the truth is ascertained but to 
        advance his client's cause by any ethical means. Within the 
        limits of professional propriety, causing delay and sowing 
        confusion not only are his right but may be his duty. The 
        appearance of counsel for the citizen is likely to lead the 
        Government to provide one--or at least to cause the 
        Government's representative to act like one. The result may be 
        to turn what might have been a short conference leading to an 
        amicable result into a protracted controversy. . . .''

    ``These problems concerning counsel and confrontation inevitably 
bring up the question whether we would not do better to abandon the 
adversary system in certain areas of mass justice. . . . While such an 
experiment would be a sharp break with our tradition of adversary 
process, that tradition, which has come under serious general challenge 
from a thoughtful and distinguished judge, was not formulated for a 
situation in which many thousands of hearings must be provided each 
month.'' Friendly, ``Some Kind of Hearing,'' 123 U.Pa.L.Rev. 1267, 
1287-1290 (1975).
    Thus, even apart from the frustration of Congress' principal goal 
of wanting the veteran to get the entirety of the award, the 
destruction of the fee limitation would bid fair to complicate a 
proceeding which Congress wished to keep as simple as possible. It is 
scarcely open to doubt that if claimants were permitted to retain 
compensated attorneys the day might come when it could be said that an 
attorney might indeed be necessary to present a claim properly in a 
system rendered more adversary and more complex by the very presence of 
lawyer representation. It is only a small step beyond that to the 
situation in which the claimant who has a factually simple and 
obviously deserving claim may nonetheless feel impelled to retain an 
attorney simply because so many other claimants retain attorneys. And 
this additional complexity will undoubtedly engender greater 
administrative costs, with the end result being that less Government 
money reaches its intended beneficiaries. 473 U.S. at 323-26.
    Undoubtedly, an attorney may very well provide some benefit in an 
individual case. Our consideration involves the good of the whole, 
however. We do not see how permitting attorneys to charge veterans for 
claims assistance could be beneficial for veterans or the system 
generally. Apart from the likely adverse effect discussed above where 
it will come to be accepted that benefits cannot be obtained without a 
fight and the services of a lawyer, lawyers are unlikely to have any 
other beneficial effect upon the system. Unlike nonprofit veterans 
organizations, which work for the good of the system and represent 
veterans free and without regard to the prospects or amount of monetary 
benefits, lawyers will participate for the purpose of earning fees. 
Because they will be representing veterans for a fee, they may only 
assist veterans in fee-producing claims, leaving veterans on their own 
in other matters. For example, it is unlikely that lawyers will be 
willing to spend great amounts of time counseling veterans, just 
listening to their problems, or helping them resolve all sorts of 
difficulties with VA that do not involve awards of monetary benefits. 
Veterans service organization representatives, whose sole function is 
assistance to veterans and their dependents, do these things every day. 
Veterans service organization representatives are not ``on the clock'' 
for purposes of charging fees and are therefore less concerned with 
taking a little additional time to explain matters and discuss 
veterans' concerns. Much of what service officers gladly do for VA 
claimants would not be fee producing if done by attorneys, unless, of 
course, the veteran was foolish enough to pay an hourly fee for this 
service.
    It is unlikely that an attorney would be willing to assist a 
veteran in obtaining service connection for a condition that would only 
be rated 0 percent and would therefore result in no award of benefits. 
It is unlikely that an attorney would assist a widow in applying for a 
burial flag or VA headstone. It is unlikely that an attorney would 
assist a widow in a claim for a $300 burial allowance, or a veteran in 
obtaining the small annual clothing allowance. If an attorney did 
provide assistance with such matters, his or her fee might consume most 
or all of the benefit, or actually cost the claimant a substantial sum 
where the benefits had no monetary value. A veteran should not have to 
pay to get assistance in completing an application, especially when the 
benefit might be one about which there is no dispute as to entitlement. 
A lawyer might charge to help file an application where legal 
representation per se may never be necessary. In any event, VA benefits 
should go to the intended beneficiaries and should not come to be 
viewed as a source of fees for the legal profession.
    It is understandable why some attorneys advocate changing the 
system. Perhaps veterans who advocate it do so under the belief that 
they would generally receive better representation by attorneys. Data 
on the subject simply do not support that belief. Attorneys presumably 
choose only the cases they believe more meritorious, where most 
veterans service organizations essentially represent any claimant and 
do not refuse representation in cases merely because of a lower 
likelihood of favorable outcome. Nonetheless, historically and 
currently, attorneys still have no greater success rate in BVA appeals, 
for example, than veterans service organization representatives. 
Indeed, the few veterans service organizations that are selective in 
who they represent have substantially higher success rates than 
attorneys, and even veterans service organizations that represent 
essentially any claimant that requests representation, such as DAV, 
generally have greater percentages of allowances on appeal than 
attorneys. In 2004, the average BVA allowance rate among veterans 
service organizations was 19.38 percent. The allowance rate for 
attorneys was 16.6 percent. All but one VSO had higher allowance rates 
than lawyers.
    These are some of the reasons for our position. We believe the 
value of preserving the beneficial aspects of the current VA system and 
maintaining the special status veterans enjoy outweigh any benefit of 
permitting individual veterans to choose attorney representation. In 
public policy considerations, the right of personal choice is, of 
course, favored except when the good of the whole clearly outweighs any 
benefit to the individual or the value of individual choice.
    Those who understand and appreciate the unique nature and purpose 
of the VA process also know that the formalities necessary to ensure a 
level playing field and referee proceedings between competing 
adversaries are not only superfluous to the VA process but actually 
operate to create inefficiencies and inhibit justice.
    Thus, the foreseeable consequences of introducing lawyers in the 
administrative process are far reaching and almost uniformly 
undesirable. No positive tradeoff would result. It would not only, on 
the whole, be detrimental to the administrative claims processing 
system and the veterans it serves, it would decrease the efficiency of 
the system and ultimately cost taxpayers more, with no benefit except 
as a new source of fees for lawyers.
    Our goal is to put veterans' benefits in the pockets of veterans; 
NOVA's goal is to put veterans' benefits in the pockets of attorneys. 
We are taking a public policy position for veterans; NOVA is taking a 
public policy position for lawyers. We believe it would be a major 
mistake for Congress to change the law to permit attorneys to charge 
veterans for assistance in filing claims and prosecuting claims in the 
initial administrative proceedings.
    Question 3. It is my understanding that VA decides some disability 
compensation claims on a priority basis. What is DAV's' position on the 
appropriateness of providing priority to certain veterans' disability 
claims?
    Answer. With the situation of claims backlogs, we believe it is 
appropriate for VA to give some claims priority, such as those of 
elderly veterans pending for a long time. As you know, section 7107 of 
title 38, United States Code, authorizes BVA to advance the case of a 
seriously ill veteran on the docket. As a general rule, we believe VA 
should decide all claims in such a timely fashion as to make priorities 
unnecessary. Although the work of VA's ``Tiger Teams'' in reducing the 
backlog of certain claims is commendable, the necessity for Tiger Teams 
is a reflection of the poor functioning of the system overall.
    Questions 4a-4b. Currently, priority access to VA health care is 
given to combat theater veterans who are within 2 years of their 
service discharge date. Does DAV support that priority access?
    Would DAV support the same kind of priority for disability claims 
filed by combat veterans, or any recently separated veterans, who are 
within 2 years of their service discharge date?
    Answer. In the situation that exists, DAV supports priority access 
to health care for recently discharged combat theater veterans. We 
believe these veterans should be given needed health care promptly to 
aid in their successful transition to civilian life. However, this 
practice raises some concerns. Though we approve of the preferences 
given to combat veterans in connection with proof of claims, we 
continue to be concerned with other practices that distinguish between 
combat and non-combat veterans. In today's circumstances, many members 
of the Armed Forces are exposed to risks similar to those in combat 
theaters. Also, with the insufficient resources provided for veterans' 
medical care, we are concerned that care for older veterans must be 
delayed to give priority to recently discharged combat theater 
veterans. The better solution would be to provide VA with enough 
resources to enable it to treat all veterans promptly.
    Veterans who file claims at military discharge centers receive 
faster service on their claims. This is efficient, and we support it. 
Veterans who file claims with regional offices sometime after discharge 
should have no priority, however, because that would be unfair to the 
other veterans whose claims would be delayed as a result. Again, if VA 
had sufficient resources, all claims could receive the prompt attention 
they deserve.
    Question 5. At the hearing, I asked Admiral Cooper about the degree 
of collaboration there is between VBA's Rating Veterans Service 
Representatives and Vocational Rehabilitation Counselors prior to a 
veteran receiving a Total Disability due to Individual Unemployability 
(TDIU) rating. Does DAV believe that a veteran should receive 
employment counseling and, if necessary, training through the 
Vocational Rehabilitation & Employment program prior to being assigned 
a TDIU rating?
    Answer. Some veterans who have become unable to work because of 
their service-connected disabilities could be trained for other 
employment. We believe most of these veterans would prefer earning a 
wage to living on the very modest monthly compensation paid to totally 
disabled veterans. Many other veterans are too disabled to work, 
however, and attainment of a vocational goal is simply not feasible. 
Vocational rehabilitation counselors could prescreen these veterans and 
afford counseling in those cases where it appears that training is 
feasible, considering the veteran's disability, age, and other factors 
favorable to rehabilitation. The disability rating should not be 
delayed pending this review.
    As you know, section 1163 of title 38, United States Code, already 
requires VA to make vocational rehabilitation counseling services 
available to veterans rated totally disabled by reason of 
unemployability. Under this section a veteran may attempt work without 
any loss of benefits until the veteran has demonstrated an ability to 
maintain employment for more than 12 consecutive months.
    Questions 6a-6b. It is my understanding that a veteran's age may 
not be considered in a determination of individual unemployability 
(IU). Is that an appropriate limitation when considering IU claims from 
veterans who are at or beyond a commonly accepted retirement age?
    Should there be an age-appropriate limit on the payment of IU?
    Answer. Disability compensation is an age-neutral benefit, unlike 
Social Security disability benefits where a person of advanced age is 
more likely to be found disabled than a younger person with the same 
disability. The disability compensation program seeks to treat all 
veterans the same. Age should be neither a favorable nor unfavorable 
factor. Entitlement to compensation at any level should be based solely 
on the nature of the disability. VA's regulation provides:
    Age may not be considered as a factor in evaluating service-
connected disability; and unemployability, in service-connected claims, 
associated with advancing age or intercurrent disability, may not be 
used as a basis for a total disability rating. Age, as such, is a 
factor only in evaluations of disability not resulting from service, 
i.e., for the purposes of pension. 38 CFR Sec. 4.19 (2004).
    If a veteran became unemployable at some time before normal 
retirement age, the veteran will not have had the opportunity to save 
for or earn retirement benefits and certainly should not have the 
compensation reduced upon reaching retirement age. Also, in today's 
society, many people work well beyond what was once considered 
retirement age. It is to be expected that progressive disabilities will 
worsen with age, and some veterans will become unemployable as they get 
older. Individual umeployability is not a retirement benefit, however, 
and VA's rules require evidence that the veteran became unable to work 
because of service-connected disability. To be found entitled to a 
total rating based on individual unemployability, a veteran must 
demonstrate that cessation of work was because of the service-connected 
disability. See 38 CFR Sec. Sec. 4.16, 4.18 (2004). A veteran who 
claims individual unemployabilty upon normal retirement and without any 
demonstrated worsening of his or her service-connected disability would 
properly be denied the benefit. Nonetheless, a veteran of any age 
should be awarded the benefit if service-connected disability causes 
the veteran to terminate employment. Age should be a factor only with 
respect to whether the veteran should be considered for vocational 
rehabilitation.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Larry E. Craig 
                          to Kenneth B. Kramer
    Question 1a. At the hearing, you suggested that Congress should 
consider eliminating the role of the United States Court of Appeals for 
the Federal Circuit in reviewing appeals involving veterans' benefits 
claims. Would you please comment further on what problems you perceive 
with the current judicial review structure?
    Answer. The optimal structure for the judicial appeal process 
should achieve the best possible balance between having as many layers 
of appeal as required for the best possible decision and the need for 
reaching finality of result as quickly as possible.
    There can be no true dispute that the present structure, insofar as 
it allows appeals to both the U.S. Court of Appeals for Veterans' 
Claims (Court) and the U.S. Court of Appeals for the Federal Circuit 
(FC), delays finality from a matter of months to a matter of years. As 
to the latter, in some cases, such as where the Court affirms, but the 
FC overturns the Court and mandates a return of the case to the VA 
administrative process, the number of additional years involved could 
extend to a decade. Clearly, if the sole consideration is expeditious 
review, one layer of Federal Court review, rather than two, short of 
the Supreme Court, will provide that result 100 percent of the time.
    The question then becomes whether there is sufficient value added 
as to accuracy of decisionmaking, to justify the inherent additional 
time needed for review in both the Court and the FC. Judicial accuracy, 
unfortunately, is really an art-form, rather than a science, and like 
beauty, is in the eye of the beholder. In most situations, the winning 
party believes that the decision is accurate and the loosing party 
takes a contrary view.
    Moreover, because accuracy is an art-form, its presence is not 
usually the readily apparent clear-cut, black or white kind of stuff, 
but rather is dependent on the kind of analysis involving subtle shades 
of gray. And it is these subtle shades of gray which form the basis for 
an ``accurate'' result to be ``distinguished'' in future cases. Whether 
such a distinction justifies a different result in a different case 
again rests in the eye of the beholder, whether the beholder be 
litigant, judge, or academic.
    As such a beholder, it is my view that judicial decisions, 
sometimes under the rubric of being ``distinguished'' and sometimes 
because judges are fallible, are at times not only inconsistent between 
appellate courts, but inconsistent within the same court. Accordingly, 
other than for perceptual purposes to the outside world and for loosing 
litigants to obtain one more bite at the apple, I see little value 
added in having both the Court and the FC involved in review of 
veterans' cases. Even assuming that the FC is always more accurate than 
the Court, a review of the FC website shows that the FC reverses the 
Court in approximately 11 percent of the cases it reviews. It is 
debatable whether a better result in about 1 of every 10 cases can 
justify the additional delay and confusion inherent in multiple layers 
of appellate review. But this debate need not be waged. Recognizing 
that I am speaking as a beholder and one indeed who might be viewed as 
nonobjective, it is my view, after 15 years of fulltime participation 
in veterans' law, that because of the exclusive nature of its work, 
many times the Court will have a greater understanding of the subject 
matter and awareness of the systemic impact of its decisions on the 
adjudication system than the FC. Accordingly, I would conclude that a 
significant number of reversed cases should not have been reversed so 
that the value-added accuracy of FC review is a much lower percentage 
than that reflected on the website.
    The old axiom about too many cooks spoiling the broth rings true. 
Here the presence of cooks in different kitchens creates not only 
delay, but confusion as to the state of the law.
    Question 1b. Do you believe the current judicial review structure 
affects the ability of the VA system to provide prompt, accurate, or 
consistent decisions?
    Answer. Yes and for the worse. Given the situation described in my 
answer to Part A, the VA is often euphemistically caught between what 
its supervisor, the Court, and its big boss, the FC, tells it to do. 
Anyone or anything trapped in such an environment reacts with delay, 
indecision and inconsistency. The VA is never sure whether the big boss 
will back the supervisor or scold him. And even where the matter under 
consideration is not brought to the attention of the big boss, the VA 
still must contend with prior edicts of the boss that seem inconsistent 
with what the supervisor is now telling it to do.
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                          to Daniel L. Cooper
    Question 1. I am intrigued by the recommendations in former Chief 
Judge Kenneth Kramer's testimony, including his suggestion to improve 
the claims process at the regional office level by having an 
Administrative Law Judge or a Veteran's Law Judge working at the 
regional office on the disputed cases. What do you think of this 
proposal?
    Answer. Judge Kramer made a number of recommendations at the 
hearing; including placing Veterans' Law Judges (VLJs) of the Board of 
Veterans' Appeals (Board) in VA regional offices. Neither the Veterans 
Benefits Administration (VBA) nor the Board supports this 
recommendation. The existing appeals process with layers of review was 
established, in part, to ensure fairness and integrity and promote 
claimant confidence in the decisions. Decentralization or 
regionalization of the Board by placing VLJs at the regional offices 
could affect the appearance of Board independence by creating a 
perception in the minds of appellants and their representatives that 
the Board is an extension of the regional office and not a separate and 
independent body that exists to fairly arid impartially consider their 
appeals of regional office decisions.
    Decentralization or regionalization would also pose substantial 
challenges to the Board in maintaining the efficiency of its 
operations. Given the rapid changes in veterans law and the complexity 
of the VA disability system, it is advantageous for VLJs to work in a 
single location where they have the opportunity for a quick and free 
exchange of ideas and information and can quickly adapt to changes in 
the law. This kind of environment fosters consistency in understanding 
and application of the law. Additionally, regionalization of the Board 
would create logistical problems, increase expenditures for support 
services and legal research resources, and make management of the case 
flow and the conduct of quality reviews more difficult.
    Question 2. Has VA reviewed the costs of the large numbers of 
remanded decisions, and can you provide me with estimates?
    Answer. VBA created the Appeals Management Center (AMC) in July 
2003 to serve as a centralized processing site for appeals remanded 
from the Board for further development. AMC has 87 employees and 
receives approximately 18,000 remands per year. VBA currently has a 
total of 26,000 remands pending, approximately 19,000 of which are at 
AMC. Because of the large inventory of pending remands, an additional 
46 employees now assist AMC in processing remands.
    The fiscal 2005 operating budget for AMC totals $6.9 million. The 
salary cost for the additional 46 employees currently assisting AMC is 
estimated at $2.2 million annually.
    Question 3. What is VA doing to respond to the GAO report earlier 
this month raising questions about the consistency of decisionmaking in 
various regional offices across the country?
    Answer. On May 5, 2005, the General Accountability Office (GAO) 
issued report GAO-05-655T, ``Board of Veterans' Appeals Has Made 
Improvements in Quality Assurance but Challenges Remain for VA in 
Assuring Consistency.'' The report concluded that VA still lacks a 
systematic method for ensuring the consistency of decisionmaking within 
VA as a whole. GAO did find that VA has begun efforts to understand why 
average compensation payments per veteran vary from State to State. The 
report also noted that in response to inquiries from the media and 
members of Congress about rating variation, the Secretary of Veterans' 
Affairs asked the Office of Inspector General (lG) to determine why 
there are differences in VA's average monthly disability compensation 
payments made to veterans living in different States. The IG made a 
number of recommendations. VBA actions undertaken or planned in 
response to the recommendations are summarized below:
    Recommendation 1: Conduct a scientifically sound study using 
statistical models of the major influences on compensation payments to 
develop baseline data and metrics for monitoring and managing 
variances, and use this information to develop and implement procedures 
for detecting, correcting, and preventing unacceptable payment 
patterns.
    Actions Taken/Planned: VBA worked closely with the Office of 
Policy, Planning and Preparedness to award a contract to the Institute 
for Defense nalyses (IDA) in May 2005 to conduct the recommended study. 
IDA has initiated work on the contract. It is estimated that the study 
will take at least 18 months to complete.
    Recommendation 2: Coordinate with the Veterans' Disability Benefits 
Commission to ensure all potential issues concerning the need to 
clarify and revise VA's Schedule for Rating Disabilities are reviewed, 
analyzed, and addressed.
    Actions Taken/Planned: VBA is prepared to provide the Veterans' 
Disability Benefits Commission whatever information or assistance is 
needed to fulfill its statutory charge. The Under Secretary for 
Benefits addressed the Commission on July 22, 2005, on disability 
compensation trends and developments, and on May 9, 2005, the Director 
of the Compensation and Pension (C&P) Service briefed the Commission 
about VA compensation and related benefits. VBA will work with the 
Office of Policy, Planning and Preparedness to ensure that the 
Commission has the required information and support to review, analyze, 
and address all potential issues concerning the need to clarify and 
revise the Schedule for Rating Disabilities.
    Recommendation 3: Conduct reviews of rating practices for certain 
disabilities, such as PTSD, individual unemployability (IU), and other 
100 percent ratings, to ensure consistency and accuracy nationwide. At 
a minimum, these reviews should consist of data analysis, claims file 
reviews, and on-site evaluation of rating and management practices.
    Actions Taken/Planned: VBA will review post traumatic stress 
disorder (PTSD) cases adjudicated between 1999 and 2004 in which the 
veteran was awarded disability compensation for PTSD at the 100 percent 
rate; or was awarded 100 percent disability compensation based on a 
determination of individual unemployability (IU), with PTSD as the 
veteran's primary disability. These are the specific areas where the IG 
found problems in VBA's processing of PTSD claims. The initial stage of 
this review is underway.
    Additionally, during its regularly scheduled oversight visits to 
VBA regional offices, the C&P Service will review cases involving other 
disabilities that received a 100 percent scheduler or IU rating. This 
review will focus on whether evidence to substantiate the claim was 
sufficiently developed and whether the disability evaluation assigned 
was appropriate, as well as on relevant management practices.
    Recommendation 4: Expand the national quality assurance program by 
including evaluations of PTSD rating decisions for consistency by 
regional office, and to ensure sufficient evidence to support the 
rating is fully developed and documented, such as verifying the 
stressor event.
    Actions Taken/Planned: Using the findings from the review of the 
PTSD cases, VBA will develop additional procedural guidance and 
training for our decisionmakers and make appropriate systemic and 
regulatory changes to improve the consistency and accuracy of our 
decisions. We will also analyze rating and claims data from VBA claims-
processing systems on an ongoing basis to identify any unusual patterns 
or variance by regional office or diagnostic code for further 
consistency review. To support these consistency reviews, the C&P 
Service is developing new review protocols to monitor and review rating 
variations with regard to particular diagnostic codes.
    Recommendation 5: Coordinate with the Veterans' Health 
Administration (VHA) to improve the quality of medical examinations 
provided by VA and contract clinicians, and to ensure medical and 
rating staff are familiar with approved medical examination report 
templates and that the templates are consistently used.
    Actions Taken/Planned: VBA continues to work with VHA to improve 
the quality of medical examinations performed to support disability 
compensation evaluations. VBA is working with the Compensation and 
Pension Examination Program (CPEP) Office to ensure that all automated 
examination report templates thoroughly and accurately solicit the 
medical evidence needed to consistently evaluate the disability that is 
the basis of a claim. VBA is also working with VHA to establish a 
formal approval process for the templates and to obtain agreement on 
the mandatory use of approved templates.
    Recommendation 6: In view of growing demand, the need for quality 
and timely decisions, and the ongoing training requirements, re-
evaluate human resources and ensure the VBA field organization is 
adequately staffed and equipped to meet mission requirements.
    Actions Taken/Planned: VBA is carefully reviewing its budget 
formulation and resource allocation methodologies. VBA will refine and 
make appropriate changes to the methodologies to ensure the resource 
needs are accurately projected and the field organization is 
appropriately staffed and funded. While it is critically important that 
the field organization be staffed and equipped to meet our high 
expectations for service delivery, VBA will also work to ensure the 
adequacy of the resources devoted to investment in information 
technology, training, and oversight--all essential components for 
achievement of our quality and consistency goals.
    Recommendation 7: Consider establishing a lump-sum payment option 
in lieu of recurring monthly payments for veterans with disability 
ratings of 20 percent or less.
    Actions Taken/Planned: It is expected that the Veterans' Disability 
Benefits Commission will consider this public policy issue. The 
Veterans' Disability Benefits Commission report is expected 15 months 
following its initial public meetings, which were held on May 9 and 10, 
2005.
    Recommendation 8: Undertake a more detailed analysis to identify 
differences in claims submission patterns to determine if certain 
veteran sub-populations, such as World War II, Korean Conflict, or 
veterans living in specific locales, have been underserved, and perform 
outreach based on the results of the analysis to ensure all veterans 
have equal access to VA benefits.
    Actions Taken/Planned: The Veterans' Benefits Improvement Act of 
2004 requires VA to submit a report to Congress on servicemembers' and 
veterans' awareness of benefits and services available under VA laws. 
The VA Office of Policy, Planning and Preparedness is conducting a 1-
year research study to determine servicemember and veteran awareness of 
VA benefits and services and how they can be obtained. The study will 
include recommendations for improving VA outreach and awareness for 
servicemembers and veterans of benefits available to them.
    VBA will use the results of this study and other information and 
data related to claims submission patterns by period of service and 
specific locales to identify any significant differences. VBA will then 
initiate outreach and focused campaigns specifically directed at any 
population of veterans potentially underserved.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                          to Kenneth B. Kramer
    Question 1. As to your suggestion to place an Administrative Law 
Judge or a Veterans' Law Judge working at the Regional Office on the 
disputed cases, can you explain in further detail how you believe this 
will help the system?
    Answer. The help will not come in the form of ultimately better 
decisionmaking; but rather, in faster decisionmaking that will maintain 
the quality of the existing system. In other words, the purpose of 
using an Administrative Law Judge (ALJ) or Veterans Law Judge (VLJ) is 
to finalize the maximum possible number of decisions at the local level 
in order to minimize the number of appeals.
    The present appellate process frequently results in a case being 
caught in a cycle of remands that causes tremendous delay before a 
final decision results. Each time a case changes its level of 
adjudication--from the Regional Office (RO) to the Board of Veterans 
Appeals (BVA) or the reverse--from the Board of Veterans' Appeals to 
the U.S. Court of Appeals for Veterans' Claims (Veterans Court) or the 
reverse--or from the Veterans Court to the U.S. Court of Appeals for 
the Federal Circuit (FC) or the reverse--there is inherent delay which 
can range from months to years. Each level has its own rules, 
procedures, and way of doing business that translates into backlog 
producing delay.
    What I am suggesting, in essence, is to produce as the last step at 
the RO, where there is disagreement, an ALJ or VLJ decision of at least 
the same quality as a decision presently produced at the Board. After 
that kind of decision is rendered, and it still results in 
disagreement, an appeal to the Board will require the same specificity 
as is presently required for an appeal from the Board to the Veterans 
Court.
    Such a change will put substantial down the chain, rather than up 
the chain, momentum on final administrative (VA) decisionmaking. This 
kind of momentum is highly beneficial in two regards: first, it 
provides for an expert decision much earlier in the process; and 
second, it permits for a second level of expert decisionmaking in those 
cases in which there is a significant legal question.
    With such a change, another derivative benefit is also potentially 
available. Under the existing system, there are three levels of expert 
decisionmaking--one at the administrative level and two at the judicial 
level. Once two levels of expert administrative decisionmaking are 
implemented, there is no basis on which to continue two levels of 
judicial decisionmaking, unless one believes that four, rather than 
three, levels of experts are now necessary. Assuming that adding 
another layer is counterproductive if the goal is reducing backlog and 
delay, either the FC, as I recommended during the hearing, or the 
Veterans Court, can be eliminated from the judicial review process.
                               __________
  Prepared Statement of Quentin Kinderman, Deputy Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    On behalf of the 2.7 million members of the Veterans of Foreign 
Wars of the United States (VFW) and our Ladies Auxiliary, I appreciate 
the opportunity to submit a statement for the record on this important 
topic. I congratulate the Committee for the decision to devote the time 
and effort to focus attention on what has been a chronic problem for 
the Veterans' Benefits Administration (VBA) and for America's veterans. 
The backlogs of case work and the resultant delays have been, for a 
decade or more, resistant to efforts to solve the problem, and most 
veterans and their survivors have to wait longer than a reasonable 
period of time for a decision on their claims for disability or death 
benefits.
    I will not dwell on the statistics regarding the VA's performance, 
or the number of cases pending, other than to clarify an apparent 
conflict between numbers that the VFW provided in previous testimony, 
and numbers provided by the VA.
    VBA often provides the rating workload number. As of May 20, 2005, 
this was 342,811 cases. It is only part of what the 7,336 employees 
have to face in workload. What concerns the Veterans of Foreign Wars is 
that the same employees also have 122,882 pending cases not involving 
ratings, 153,456 pending appeals, which quite frankly, each takes much 
more time and effort than an original or reopened claim, and 79,335 
education claims, in the rapidly growing GI bill program. This adds up 
to over 700,000 claims for the same 7,336 employees.
    The VFW has long supported providing adequate resources to the VBA 
to provide highly accurate and timely benefit decisions. We realize 
that VBA is often forced to suffer problems that are directly related 
to the austerity of their funding. This includes the consequences of 
addressing in the short run, critical situations that are a consequence 
of the inability to assume that the proper long term resources will be 
available. However, we also believe that the current situation of 
persistent backlogs and delays in claims processing are not entirely 
related to resource levels.
    The recent IG report, styled as State Variances in VA Disability 
Compensation Payments, but including material far from that topic, 
documents as part of a VBA decisionmaker survey, the growing discomfort 
in VBA with the workload, and the imbalance to the staffing available 
to work on it, especially at the decisionmaker level. These dedicated 
employees have our sympathy and support. From their point of view, 
there is truly a never-ending supply of already old work to do. 
However, this has been the situation for many years. The emphasis from 
the top of the organization has persistently been on moving the cases 
along, to reduce the overall count, to bring down the backlog. VFW 
believes that an unintended price has been paid for this emphasis, both 
in the quality or accuracy of the decisions, and in VBA's institutional 
ability to address these chronically high caseloads. The growing 
frustration and stress of workload pressure have inspired some 
dedicated VBA employees to find early retirement attractive. The 
cumulative effect of subordinating training and guidance to production 
has taken its toll.
    Compared to the compensation program of a decade or more ago, the 
work is much more complicated. It is now a complex thicket of court 
decisions, and statutory requirements that occasionally require the 
readjudication of thousands of cases. Veterans' claims adjudication is 
no longer a business that can be managed simply by the numbers. Our 
impression of management by the numbers is, in essence, a balancing of 
the numbers to even out workload, nationwide. Old work is ``brokered'' 
from one office to another office that is relatively advantaged in the 
age and volume of casework. The reward for work done is more work from 
another office. Perhaps this is effective in the short term, but after 
a decade or so, we think that it is possible that the office people may 
have figured out how to stay in the middle of the pack, low enough not 
to need to broker out work, but high enough not to be a broker in 
station as well.
    We also believe that, in the difficult situation of constant 
workload pressure, some confounding factors may have established 
themselves in the claims processing system. VBA operates a rather 
imposing quality monitoring system, acronym ``STAR'' which finds, on a 
sampling basis, that about 15 percent of the cases have a significant 
error. There is little actual constructive feedback to the 
decisionmakers. The VFW thinks that, for a claims process that 
profoundly affects the lives of the veteran claimants, 15 percent is a 
very high error rate. It suggests that for 15 out of every 100 veterans 
or their survivors, after waiting many months, or even years, for a 
decision from VA, they receive a decision that is significantly flawed.
    The IG, in its recent study, found an association between a higher 
average compensation payments, and representation by veteran's service 
organizations (VSO). We believe that this may in part reflect the VSOs 
success in identifying rating decisionmaker's errors, and insisting on 
their correction, either locally, or on appeal. While we are proud of 
the efforts that VSOs make to assist veterans and their survivors, we 
have serious reservations about VA's tolerance for a level of errors 
that most people would not accept in most of life's other transactions, 
like one's bank account or virtually any consumer product or service.
    Furthermore, we do not believe that this deficiency in the ability 
to produce consistently accurate decisions can be divorced from the 
more public issue of the claims backlog. Clearly, a significant and 
cumulative portion of the work must be adjudicated more than once, 
often in an adversarial and inefficient situation leading to even more 
burdensome appeals. As pointed out in the VSO's Independent Budget, 
fiscal year 2006, the emphasis on production at the expense of quality 
leads only to short-term gains. The evidence of this is obvious, and 
need not be repeated here.
    Also regarding this IG report, we are informed that the VA plans to 
do a massive review of PTSD and Individual Unemployability claims, 
based on the IG's findings. The VFW believes that this massive review, 
to be accomplished using VBA's claims processing resources and people, 
will significantly increase VA's caseload backlogs. Moreover, the 
review, which VA has apparently decided to do, is based on IG findings 
in a small sample of cases, using expertise that appears, to our 
knowledgeable people, to be exceedingly thin. We urge the VA to at 
least review the IG's cases using experts from VBA and the BVA before 
committing to this questionable plan. We are a country at war. Many of 
our soldiers and Marines are experiencing sustained urban combat of the 
worst kind. Some of them will need the VA's help when they return. An 
investigation that slanders the wartime experiences of their parents 
and older siblings will not encourage them to come to the VA.
    Through most of the recent history of claims processing in the VBA, 
appeals have been the storm looming on the horizon. We have observed in 
VBA the normal tendency to focus on what is the immediate priority, 
often at the expense of other essential tasks. Too often in recent 
years, the priority has been new claims, and the other task has been 
appeals. As with the other claims, the backlog of appeals has been 
confounded with a larger than appropriate error rate, incessant 
remands, and in many cases, extraordinary delays in processing. VBA has 
sought to address these problems by creating an Appeals Management 
Center (AMC) here in Washington. By all accounts, the AMC and its 
dedicated and committed staff have begun to make a difference. The AMC 
was, however, necessarily created from the best available trained 
employees in VBA, and its mission is to meet a need in the appeals 
process that frankly was not being successfully addressed before. The 
AMC addresses the problem of appeal remand development, and with the 
cooperation of VFW and other VSOs, even successfully addresses some 
claims prior or instead of returning then to BVA. Creation of the AMC 
does, however, reduce VBA's capacity in the other offices to deal with 
claims, perhaps even affecting VBA's existing efforts to improve 
quality, by the number of employees transferred to the AMC. This should 
be cause for concern for officials with overall responsibility for 
VBA's mission.
    We supported the establishment of the AMC, and continue to work 
with their people to improve the appeal process, but we are concerned 
that the resources in VBA are finite, their people require long and 
complex training and are not easily replaced, and that the organization 
is eroding as a result of crisis management, an aging workforce, and a 
program that seems to be growing relentlessly more complex and 
adversarial, and is now threatened with the possibility of massive and 
perhaps, from the veterans' point of view, catastrophic change. Perhaps 
the answers lie in some combination of technology, more effective and 
enlightened training, and a new generation of employees, committed to 
serve a new generation of wartime veterans.
    VBA indeed faces a dilemma. They have a complex and often modified 
program, a frustrated workforce, myopic focus on production to address 
backlogs to which training and quality control are subordinated, and a 
reliance on brokering work from office to office to avoid short-term 
crises. Added to this is an increasing burden of appeals, and a new 
generation of wartime veterans deserving of the best service. The 
future is indeed challenging for VBA.
    We do know, however, that the answer does not lie in the 
dismantlement or diminishment of America's commitment to our heroes, 
either in the programs necessary to support them, or the organization 
necessary to provide these earned benefits.
  

                                  
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